MuleSoft, Inc.s3.amazonaws.com/ipo_candy/MULE_IPO_Prospectus.pdf · Application networks built on Anypoint Platform increase in value as new nodes are added, resulting in network

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Subject To Completion. Dated March 6, 2017.

13,000,000 Shares

MuleSoft, Inc.

Class A Common Stock

This is an initial public offering of shares of Class A common stock of MuleSoft, Inc.

Prior to this offering, there has been no public market for the Class A common stock. It is currently estimated that the initialpublic offering price per share will be between $12.00 and $14.00. We have applied to list the Class A common stock on the NewYork Stock Exchange under the symbol “MULE”.

Following this offering, we will have two classes of common stock, Class A common stock and Class B common stock.The rights of the holders of Class A common stock and Class B common stock are identical, except voting and conversion rights.Each share of Class A common stock is entitled to one vote. Each share of Class B common stock is entitled to 10 votes and isconvertible at any time into one share of Class A common stock. All shares of our capital stock outstanding immediately prior tothis offering, including all shares held by our executive officers, employees and directors, and their respective affiliates, will bereclassified into shares of our Class B common stock immediately prior to this offering. The holders of our outstanding Class Bcommon stock will hold approximately 98.9% of the voting power of our outstanding capital stock following this offering.

We are an “emerging growth company” as defined under the federal securities laws, and as such, we have elected tocomply with certain reduced reporting requirements for this prospectus and may elect to do so in future filings.

See “Risk Factors” on page 12 to read about factors you should consider before buying shares of the Class Acommon stock.

Neither the Securities and Exchange Commission nor any other regulatory body has approved or disapproved ofthese securities or passed upon the accuracy or adequacy of this prospectus. Any representation to the contrary is acriminal offense.

Per Share Total

Initial public offering price . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ $Underwriting discount(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ $Proceeds, before expenses, to MuleSoft . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ $

(1) See “Underwriting” for additional information regarding underwriting compensation.

The underwriters have the option to purchase up to an additional 1,950,000 shares of Class A common stock fromMuleSoft at the initial public offering price less the underwriting discount.

The underwriters expect to deliver the shares against payment in New York, New York on , 2017.

Goldman, Sachs & Co. J.P. Morgan BofA Merrill LynchAllen & Company LLC Barclays Jefferies

Canaccord Genuity Piper Jaffray William Blair

Prospectus dated , 2017

TABLE OF CONTENTS

Prospectus

PROSPECTUS SUMMARY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1RISK FACTORS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS . . . . . . . . . . . . . . . . . . . . . . 43MARKET AND INDUSTRY DATA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45USE OF PROCEEDS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46DIVIDEND POLICY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47CAPITALIZATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48DILUTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51SELECTED CONSOLIDATED FINANCIAL AND OTHER DATA . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS

OF OPERATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57BUSINESS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 83MANAGEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 102EXECUTIVE COMPENSATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 112CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS . . . . . . . . . . . . . . . . . . . . . 127PRINCIPAL STOCKHOLDERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 133DESCRIPTION OF CAPITAL STOCK . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 136SHARES ELIGIBLE FOR FUTURE SALE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 142MATERIAL U.S. FEDERAL INCOME TAX CONSEQUENCES TO NON-U.S. HOLDERS OF

OUR CLASS A COMMON STOCK . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 145UNDERWRITING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 149LEGAL MATTERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 156EXPERTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 156WHERE YOU CAN FIND ADDITIONAL INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 156INDEX TO FINANCIAL STATEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-1

Through and including , 2017 (the 25th day after the date of this prospectus), alldealers effecting transactions in these securities, whether or not participating in this offering,may be required to deliver a prospectus. This is in addition to a dealer’s obligation to deliver aprospectus when acting as an underwriter and with respect to an unsold allotment orsubscription.

We have not authorized anyone to provide any information or make any representations otherthan those contained in this prospectus or in any free writing prospectus prepared by or on behalf of usor to which we have referred you. We take no responsibility for, and can provide no assurance as tothe reliability of, any other information that others may give you. We are offering to sell, and seekingoffers to buy, shares of our Class A common stock only in jurisdictions where offers and sales arepermitted. The information contained in this prospectus is accurate only as of the date of thisprospectus, regardless of the time of delivery of this prospectus or of any sale of our Class A commonstock.

For investors outside of the United States: Neither we nor the underwriters have done anythingthat would permit this offering or possession or distribution of this prospectus in any jurisdiction whereaction for that purpose is required, other than in the United States. You are required to informyourselves about and to observe any restrictions relating to this offering and the distribution of thisprospectus outside of the United States.

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PROSPECTUS SUMMARY

This summary highlights selected information that is presented in greater detail elsewhere in thisprospectus. This summary does not contain all of the information you should consider before investingin our Class A common stock. You should read this entire prospectus carefully, including the sectionstitled “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results ofOperations” and our consolidated financial statements and the related notes included elsewhere in thisprospectus, before making an investment decision. Our fiscal year ends on December 31. Unless thecontext otherwise requires, the terms “MuleSoft,” “the company,” “we,” “us” and “our” in this prospectusrefer to MuleSoft, Inc. and its consolidated subsidiaries.

MULESOFT, INC.

Our mission is to help organizations change and innovate faster by making it easy to connect theworld’s applications, data, and devices.

We are entering a new era of business where competitive advantage is no longer primarilydetermined by the physical assets organizations own and control, but rather by how they connect andorchestrate a multitude of physical and technology assets. Winning organizations are “composableenterprises” that can quickly and effectively adopt new technologies and rapidly connect these assetsto drive competitive advantage.

The convergence of major technology forces such as mobile, cloud, big data, and Internet ofThings, or IoT, is driving the shift to composability and placing unrelenting demands on IT as itattempts to connect these increasingly distributed new technologies. This strains legacy ITinfrastructures that are built on heavy and hardwired architectures and creates a bottleneck totransformation.

We are enabling a fundamental shift in organizations’ technology operating models and self-serveinnovation by developers across the organization. Our customers use our Anypoint Platform to connecttheir applications, data, and devices into an “application network” in which these IT assets arepluggable using application programming interfaces, or APIs, instead of glued together with customintegration code. The application network becomes an infrastructure of discoverable building blocksthat can be used and reused to rapidly compose applications. Anypoint Platform is a single, unifiedplatform that allows organizations to easily build and rapidly scale application networks.

Anypoint Platform enables our customers to change and innovate faster by resolving the ITbottleneck. It speeds innovation by empowering developers to experiment and prototype new solutions,and freeing IT from writing manual integrations. Our platform connects and exposes existing ITinvestments as nodes on the application network for continued reuse, which can dramatically increasethe longevity of, and return on, these assets. Application networks built on Anypoint Platform increasein value as new nodes are added, resulting in network effects that drive increasing speed and agilityand lower costs.

A Customer Journey with Anypoint Platform

Each of our customers takes a different journey in building an application network with AnypointPlatform. For example, a large organization may begin with a single integration project, such ascomposing a customer profile web app for its sales team to better engage with its customers. This app

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would require real-time data feeds from various back-end applications, including order data from an on-premises eCommerce system, billing data from SAP, and customer data from Salesforce. WithAnypoint Platform, our customer exposes this data as discoverable and consumable APIs and thencombines those APIs to compose a “single view of the customer.” This single view itself can thenbecome a consumable API. All four of these APIs are building blocks that are accessible as nodes on anascent application network.

Next, the same organization may want to build a new product recommendation mobile app thatrequires the same order, billing, and customer data. In this case, the mobile app developer can useAnypoint Platform to discover and reuse the previously built single view of the customer API. She nowhas access to all of that information without depending on the IT organization or writing a single line ofcode. The developer can focus her energy on adding value to the app by using an API for productcatalog data and an API for web clickstream data that tracks customer interest and intent. She canthen combine these new APIs with the previously-created single view of a customer API to composethe new product recommendation mobile app. By having the existing APIs available on the applicationnetwork, the barriers to creating a new app and the time to realizing value are dramatically reduced.

As more applications are built and added, the application network organically expands, increasingan organization’s delivery speed. Every incremental project builds on what has been built before.Applications that are plugged into the network are now accessible and reusable by any developer with

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access to the network. The organization can more easily change any app or system without breakingor impacting other applications running on the application network.

Our Opportunity

We estimate our current market opportunity to be $29 billion. We calculate our market opportunityby identifying the number of companies worldwide across all industries based on certain independentindustry data from the S&P CapIQ database, segmented by cohorts based on annual revenue. Wethen multiply the number of companies worldwide in each cohort by our average annual contract valueof subscription and support contracts per cohort. See the section titled “Business—Our Opportunity.”

We are disrupting large, existing markets. Forrester estimates that $32 billion will be spent in2017 on the integration software market. Separately, Forrester estimates an additional $394 billion willbe spent in 2017 on systems integration project work, which does not include the spending on custom-coded integrations by internal development teams. As the market for application networks continues todevelop, we believe there is an opportunity to convert a meaningful portion of this spend to a software-based approach.

See the sections titled “Risk Factors—Risks Related to Our Business and Industry—The marketfor application networks and our platform is new and unproven” and “Risk Factors—Risks Related toOur Business and Industry—The estimates of market opportunity and forecasts of market growthincluded in this prospectus may prove to be inaccurate, and even if the market in which we competeachieves the forecasted growth, our business could fail to grow at similar rates, if at all” for certain risksrelated to our market opportunity.

Our Customers

We currently have over 1,000 customers located in over 60 countries across every majorindustry, including 30 customers with over $1.0 million in annual contract value of subscription andsupport contracts. Although our platform can be adopted by organizations of nearly any size, we focusour sales efforts on the largest global organizations. Our direct sales force targets CIOs, IT architects,and other business leaders, who are driving digital transformation in their organizations. We alsopartner with systems integrators and independent software vendors, which enhances our salesleverage by sourcing new prospects and providing systems integration services on implementations ofour platform.

Financial Overview

We have grown rapidly in recent periods. Our revenue for 2014, 2015, and 2016 was $57.6million, $110.3 million, and $187.7 million, respectively, representing a growth rate of 91% and 70%,respectively. We incurred net losses of $47.8 million, $65.4 million, and $49.6 million in 2014, 2015,and 2016, respectively.

Risk Factors Summary

Our business is subject to numerous risks and uncertainties, including those highlighted in thesection titled “Risk Factors” immediately following this prospectus summary. Some of these risks are:

• We have a history of losses, and as our costs increase, we may not be able to generatesufficient revenue to achieve and sustain profitability;

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• We have experienced rapid growth in recent periods. If we fail to continue to grow and tomanage our growth effectively, we may be unable to execute our business plan, increase ourrevenue, improve our results of operations, maintain high levels of service, or adequatelyaddress competitive challenges;

• We currently derive substantially all of our revenue and cash flows from Anypoint Platform, andany failure of this platform to satisfy customer demands or to achieve increased marketacceptance would adversely affect our business, results of operations, financial condition, andgrowth prospects;

• Our business and results of operations depend substantially on our customers renewing theirsubscriptions with us and expanding their use of our platform. Any decline in our customerrenewals or failure to convince our customers to broaden their use of our platform would harmour business, results of operations, and financial condition;

• If we were unable to attract new customers in a manner that is cost-effective and assurescustomer success, we would not be able to grow our business, which would adversely affectour results of operations, and financial condition;

• We face a number of risks in our strategy to target larger organizations for sales of ourplatform, and if we do not manage these efforts effectively, our business and results ofoperations could be adversely affected;

• Interruptions or performance problems associated with our technology and infrastructure mayadversely affect our business, results of operations, and financial condition;

• Incorrect or improper implementation or use of our platform could result in customerdissatisfaction and negatively affect our business, results of operations, financial condition, andgrowth prospects; and

• The dual class structure of our common stock has the effect of concentrating voting control withthose stockholders who held our capital stock prior to the completion of this offering, includingour executive officers, employees and directors and their affiliates, which will limit your ability toinfluence the outcome of important transactions, including a change in control. Upon thecompletion of this offering, outstanding shares of Class B common stock will representapproximately 98.9% of the voting power of our outstanding capital stock, and outstandingshares of Class B common stock held by our directors, executive officers, and each of ourstockholders who owns greater than five percent of our outstanding capital stock, will representapproximately 74.6% of the voting power of our outstanding capital stock.

Corporate Information

Our principal executive offices are located at 77 Geary Street, Suite 400, San Francisco,California 94108, and our telephone number is (415) 229-2009. Our website address iswww.mulesoft.com. Information contained on, or that can be accessed through, our website does notconstitute part of this prospectus, and inclusions of our website address in this prospectus are inactivetextual references only. We were incorporated in the state of Delaware in April 2006 as Azechi, Inc.,and in July 2006, we changed our name to MuleSource, Inc. In August 2009, we changed our name toMuleSoft, Inc.

The MuleSoft design logo, “MuleSoft” and our other registered or common law trademarks,service marks, or trade names appearing in this prospectus are the property of MuleSoft, Inc. Othertrademarks and trade names referred to in this prospectus are the property of their respective owners.

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Emerging Growth Company

The Jumpstart Our Business Startups Act, or the JOBS Act, was enacted in April 2012 with theintention of encouraging capital formation in the United States and reducing the regulatory burden onnewly public companies that qualify as “emerging growth companies.” We are an emerging growthcompany within the meaning of the JOBS Act. As an emerging growth company, we may takeadvantage of certain exemptions from various public reporting requirements, including the requirementthat our internal control over financial reporting be audited by our independent registered publicaccounting firm pursuant to Section 404 of the Sarbanes-Oxley Act of 2002, or the Sarbanes-OxleyAct, certain requirements related to the disclosure of executive compensation in this prospectus and inour periodic reports and proxy statements, and the requirement that we hold a nonbinding advisoryvote on executive compensation and any golden parachute payments. We may take advantage ofthese exemptions until we are no longer an emerging growth company.

We have elected to take advantage of certain of the reduced disclosure obligations in thisprospectus and may elect to take advantage of other reduced reporting requirements in our futurefilings with the SEC. As a result, the information that we provide to our stockholders may be differentthan what you might receive from other public reporting companies in which you hold equity interests.

The JOBS Act also provides that an emerging growth company can take advantage of anextended transition period for complying with new or revised accounting standards. We haveirrevocably elected not to avail ourselves of this exemption, and therefore, we will be subject to thesame new or revised accounting standards as other public companies that are not emerging growthcompanies.

We will remain an emerging growth company until the earliest to occur of (i) the last day of thefiscal year in which we have more than $1.0 billion in annual revenue; (ii) the date we qualify as a“large accelerated filer,” with at least $700 million of equity securities held by non-affiliates as of thelast day of our then most recently completed second fiscal quarter; (iii) the date on which we haveissued, in any three-year period, more than $1.0 billion in non-convertible debt securities; and (iv) thelast day of the fiscal year ending after the fifth anniversary of the completion of this offering.

See the section titled “Risk Factors—Risks Related to this Offering and Ownership of Our Class ACommon Stock—We are an ‘emerging growth company,’ and our election to comply with the reduceddisclosure requirements as a public company may make our Class A common stock less attractive toinvestors” for certain risks related to our status as an emerging growth company.

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THE OFFERING

Class A common stock offered by us . . . . . . . . . . . . 13,000,000 shares

Class A common stock to be outstanding after thisoffering . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13,000,000 shares

Class B common stock to be outstanding after thisoffering . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 112,991,577 shares

Total Class A common stock and Class B commonstock to be outstanding after this offering . . . . . . . 125,991,577 shares

Option to purchase additional shares of Class Acommon stock from us . . . . . . . . . . . . . . . . . . . . . . 1,950,000 shares

Use of proceeds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . We estimate that the net proceeds from the saleof shares of our Class A common stock in thisoffering will be approximately $153.5 million (orapproximately $177.0 million if the underwriters’option to purchase additional shares of ourClass A common stock from us is exercised infull), based upon the assumed initial publicoffering price of $13.00 per share, which is themidpoint of the estimated offering price range setforth on the cover page of this prospectus, andafter deducting estimated underwriting discountsand commissions and estimated offeringexpenses payable by us.

The principal purposes of this offering are toincrease our capitalization and financial flexibility,create a public market for our Class A commonstock, and enable access to the public equitymarkets for us and our stockholders. We intendto use the net proceeds from this offering forgeneral corporate purposes, including workingcapital, operating expenses, and capitalexpenditures. We may also use a portion of thenet proceeds to acquire complementarybusinesses, products, services, or technologies.However, we do not have agreements orcommitments for any material acquisitions at thistime. See the section titled “Use of Proceeds” foradditional information.

Voting rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Following this offering, we will have two classesof authorized common stock, Class A commonstock and Class B common stock. The holders ofour Class A common stock are entitled to onevote per share, and the holders of our Class Bcommon stock are entitled to 10 votes per share,on all matters that are subject to a stockholdervote.

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All shares of our capital stock outstandingimmediately prior to this offering, including allshares held by our executive officers, employeesand directors, and their respective affiliates, willbe reclassified into shares of our Class Bcommon stock immediately prior to this offering.Holders of our Class A common stock andClass B common stock will generally votetogether as a single class, unless otherwiserequired by law or our amended and restatedcertificate of incorporation. The holders of ouroutstanding Class B common stock will holdapproximately 98.9% of the voting power of ouroutstanding capital stock following this offeringand will have the ability to control the outcome ofmatters submitted to our stockholders forapproval, including the election of our directorsand the approval of any change in controltransaction. See the sections titled “PrincipalStockholders” and “Description of Capital Stock”for additional information.

Proposed New York Stock Exchange tradingsymbol . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . “MULE”

The number of shares of our Class A common stock and Class B common stock that will beoutstanding after this offering is based on no shares of our Class A common stock and 112,991,577shares of our Class B common stock (including shares of our convertible preferred stock on an as-converted basis) outstanding as of December 31, 2016, and excludes:

• 21,915,624 shares of our Class B common stock issuable upon the exercise of options topurchase shares of our Class B common stock outstanding as of December 31, 2016, with aweighted-average exercise price of $4.54 per share;

• 532,746 shares of our Class B common stock issuable upon the exercise of options topurchase shares of our Class B common stock granted after December 31, 2016, with anexercise price of $12.53 per share;

• 42,312 shares of our Class B common stock issuable upon the vesting of restricted stock units,or RSUs, granted after December 31, 2016;

• 19,640 shares of our Class B common stock, on an as-converted basis, issuable upon theexercise of a warrant to purchase shares of our convertible preferred stock outstanding as ofDecember 31, 2016, with an exercise price of $0.76375 per share; and

• 20,923,229 shares of our Class A common stock reserved for future issuance under our equitycompensation plans, consisting of:

• 15,200,000 shares of our Class A common stock reserved for future issuance under our2017 Equity Incentive Plan, or our 2017 Plan, which will become effective prior to thecompletion of this offering;

• 3,183,229 shares of our Class A common stock that will be added to the shares of our Class Acommon stock reserved under our 2017 Plan upon its effectiveness, which shares are currently

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reserved for future issuance under our 2016 Equity Incentive Plan, or our 2016 Plan (aftergiving effect to the grant of 575,058 shares of our common stock issuable upon the exercise ofoptions to purchase shares of our common stock and the vesting of RSUs granted afterDecember 31, 2016), at which time we will cease granting awards under our 2016 Plan; and

• 2,540,000 shares of our Class A common stock reserved for future issuance under our 2017Employee Stock Purchase Plan, or our ESPP, which will become effective prior to thecompletion of this offering.

Our 2017 Plan and our ESPP each provide for annual automatic increases in the number ofshares of Class A common stock reserved thereunder, and our 2017 Plan also provides for increasesin the number of shares of Class A common stock reserved thereunder based on awards under our2016 Plan and 2006 Stock Plan, or 2006 Plan, that expire, are forfeited, or otherwise repurchased byus. See the section titled “Executive Compensation—Employee Benefit and Stock Plans” for additionalinformation.

Except as otherwise indicated, all information in this prospectus assumes:

• the filing and effectiveness of our amended and restated certificate of incorporation and theeffectiveness of our amended and restated bylaws, each of which will occur immediately priorto the completion of this offering;

• the authorization of our Class A common stock and the reclassification of all outstandingshares of our common stock into an equivalent number of shares of our Class B commonstock, each of which will occur immediately prior to the completion of this offering;

• the automatic conversion and reclassification of all outstanding shares of our convertiblepreferred stock into an aggregate of 86,030,961 shares of our Class B common stock, whichwill occur immediately prior to the completion of this offering;

• the automatic conversion and reclassification of an outstanding warrant to purchase 19,640shares of our convertible preferred stock into a warrant to purchase 19,640 shares of ourClass B common stock, which will occur immediately prior to the completion of this offering;

• no exercise of outstanding stock options or warrants or settlement of outstanding RSUssubsequent to December 31, 2016; and

• no exercise by the underwriters of their option to purchase up to an additional 1,950,000 sharesof our Class A common stock from us.

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SUMMARY CONSOLIDATED FINANCIAL AND OTHER DATA

The following tables summarize our consolidated financial and other data. We have derived thesummary consolidated statements of operations data for the years ended December 31, 2014, 2015,and 2016 and the consolidated balance sheet data as of December 31, 2016 from our auditedconsolidated financial statements included elsewhere in this prospectus. Our historical results are notnecessarily indicative of the results that may be expected in the future. The following summaryconsolidated financial and other data should be read in conjunction with the section titled“Management’s Discussion and Analysis of Financial Condition and Results of Operations” and ourconsolidated financial statements and related notes included elsewhere in this prospectus.

Year Ended December 31,

2014 2015 2016

(In thousands, except share and per share data)Consolidated Statements of Operations Data:Revenue:

Subscription and support . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 48,436 $ 88,096 $ 152,843Professional services and other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9,181 22,156 34,904

Total revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57,617 110,252 187,747Cost of revenue:

Subscription and support(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,304 7,525 13,722Professional services and other(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11,509 24,645 35,341

Total cost of revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16,813 32,170 49,063

Gross profit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40,804 78,082 138,684Operating expenses:

Research and development(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17,046 24,725 32,862Sales and marketing(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58,676 93,057 122,630General and administrative(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11,911 24,368 31,577

Total operating expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 87,633 142,150 187,069

Loss from operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (46,829) (64,068) (48,385)Interest income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49 220 465Other expense, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (248) (729) (340)

Net loss before provision for income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (47,028) (64,577) (48,260)Provision for income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 728 862 1,339

Net loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ (47,756) $ (65,439) $ (49,599)

Net loss attributable to common stockholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ (47,756) $ (65,439) $ (59,035)

Net loss per share attributable to common stockholders, basic and diluted(2) . . . . . . $ (3.07) $ (3.57) $ (2.73)

Shares used to compute net loss per share attributable to common stockholders,basic and diluted(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15,531,314 18,324,048 21,623,610

Pro forma net loss per share, basic and diluted (unaudited)(2) . . . . . . . . . . . . . . . . . . $ (0.45)

Shares used to compute pro forma net loss per share, basic and diluted(unaudited)(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 110,919,770

(1) Includes stock-based compensation expense and other compensation expense related to our 2015 Common StockRepurchase and 2016 Tender Offer as follows (in thousands):

Year EndedDecember 31,

2014 2015 2016Cost of revenue—subscription and support . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 26 $ 146 $ 255Cost of revenue—professional services and other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 76 324 675Research and development . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 238 2,506 2,831Sales and marketing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 569 4,891 8,619General and administrative . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 520 4,542 4,120Total stock-based and other compensation expense . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 1,429 $ 12,409 $ 16,500

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See the section titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations” forfurther information about the 2015 Common Stock Repurchase and 2016 Tender Offer.

(2) See Notes 2, 11, and 12 to our consolidated financial statements included elsewhere in this prospectus for an explanationof the calculations of our basic and diluted net loss per share attributable to common stockholders, pro forma net loss pershare, and the weighted-average number of shares used in the computation of the per share amounts.

As of December 31, 2016

Actual Pro Forma(1)Pro Forma AsAdjusted(2)(3)

(In thousands)Consolidated Balance Sheet Data:Cash, cash equivalents, and investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 102,613 $ 102,613 $ 257,813(4)

Working capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33,550 33,550 187,020(5)

Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 202,938 202,938 356,408(6)

Deferred revenue, current and non-current . . . . . . . . . . . . . . . . . . . . . . . . . . . . 135,614 135,614 135,614Convertible preferred stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 255,946 — —Total stockholders’ equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40,103 40,103 193,573

(1) Reflects the automatic conversion and reclassification of all outstanding shares of our convertible preferred stock as ofDecember 31, 2016 into an aggregate of 86,030,961 shares of our Class B common stock immediately prior to completionof this offering.

(2) Reflects the pro forma adjustment described in footnote (1) above and the sale and issuance of 13,000,000 shares of ourClass A common stock by us in this offering, at the assumed initial public offering price of $13.00 per share, which is themidpoint of the estimated offering price range set forth on the cover page of this prospectus, after deducting estimatedunderwriting discounts and commissions and estimated offering expenses payable by us.

(3) Each $1.00 increase (decrease) in the assumed initial public offering price of $13.00 per share, which is the midpoint of theestimated offering price range set forth on the cover page of this prospectus, would increase (decrease) our cash, cashequivalents, and investments, working capital, total assets, and total stockholders’ equity by approximately $12.1 million,assuming that the number of shares of our Class A common stock offered by us, as set forth on the cover page of thisprospectus, remains the same and after deducting estimated underwriting discounts and commissions. Each increase(decrease) of 1,000,000 shares in the number of shares offered by us would increase (decrease) the amount of our cash, cashequivalents, and investments, working capital, total assets and total stockholders’ equity by approximately $12.1 million,assuming an initial public offering price of $13.00 per share, which is the midpoint of the estimated offering price range set forthon the cover page of this prospectus, after deducting estimated underwriting discounts and commissions.

(4) Pro forma as adjusted cash, cash equivalents, and investments reflects $1.7 million of deferred offering costs that had beenpaid as of December 31, 2016.

(5) Pro forma as adjusted working capital reflects $1.7 million of deferred offering costs that had been paid as of December 31,2016.

(6) Pro forma as adjusted total assets reflects $1.7 million of deferred offering costs that had been paid as of December 31, 2016.

Key Metrics

We monitor the following key metrics to help us evaluate our business, identify trends affectingour business, formulate business plans, and make strategic decisions.

December 31,

2014 2015 2016Customers (as of end of period) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 590 839 1,071Average subscription and support revenue per customer (in

thousands) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 82 $ 105 $ 143Dollar-based net retention rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 110% 121% 117%

For a discussion of our key metrics, see the section titled “Management’s Discussion andAnalysis of Financial Condition and Results of Operations—Key Metrics.”

Non-GAAP Financial Measures

Free Cash Flow and Free Cash Flow Margin

Free cash flow is a non-GAAP financial measure that we calculate as net cash (used in) providedby operating activities less purchases of property and equipment. Free cash flow margin is calculated

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as free cash flow divided by total revenue. We believe that free cash flow and free cash flow marginare useful indicators of liquidity that provide information to management and investors about theamount of cash generated from our core operations that, after the purchases of property andequipment, can be used for strategic initiatives, including investing in our business and makingstrategic acquisitions. See the section titled “Selected Consolidated Financial and Other Data—Non-GAAP Financial Measures—Reconciliation of Non-GAAP Financial Measures” for informationregarding the limitations of using free cash flow and free cash flow margin as financial measures.

Our free cash flows and free cash flow margins were as follows:


2014 2015 2016

Free cash flow (in thousands) . . . . . . . . . . . . . . . . . . . . . . . $(41,753) $(48,640) $(7,203)Free cash flow margin . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (72.5)% (44.1)% (3.8)%

The following table presents a reconciliation of free cash flow and free cash flow margin to netcash (used in) provided by operating activities, the most directly comparable financial measurecalculated in accordance with generally accepted accounting principles, or GAAP:


2014 2015 2016

(In thousands, except percentages)

Net cash used in operating activities . . . . . . . . . . . . . . . . . . . . . . . . . . . $(39,647) $(47,134) $(2,702)Less: Purchases of property and equipment . . . . . . . . . . . . . . . . . (2,106) (1,506) (4,501)

Free cash flow . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $(41,753) $(48,640) $(7,203)

Net cash used in operating activities (as a percentage of revenue) . . . (68.8)% (42.7)% (1.4)%Less: Purchases of property and equipment (as a percentage of

revenue) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (3.7)% (1.4)% (2.4)%

Free cash flow margin . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (72.5)% (44.1)% (3.8)%

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RISK FACTORS

Investing in our Class A common stock involves a high degree of risk. You should carefullyconsider the following risks, together with all of the other information contained in this prospectus,including our consolidated financial statements and related notes, before making a decision to invest inour Class A common stock. Any of the following risks could have an adverse effect on our business,results of operations, financial condition and prospects, and could cause the trading price of ourClass A common stock to decline, which would cause you to lose all or part of your investment. Ourbusiness, results of operations, financial condition, or prospects could also be harmed by risks anduncertainties not currently known to us or that we currently do not believe are material.

Risks Related to Our Business and Industry

We have a history of losses, and as our costs increase, we may not be able to generatesufficient revenue to achieve and sustain profitability.

We have incurred net losses in each period since our inception, including net losses of $47.8million, $65.4 million, and $49.6 million for 2014, 2015, and 2016, respectively. As a result, we had anaccumulated deficit of $236.2 million as of December 31, 2016. We expect our operating expenses toincrease significantly as we increase our sales and marketing efforts, continue to invest heavily inresearch and development, and expand our operations and infrastructure, both domestically andinternationally. In addition, we expect to incur significant additional legal, accounting, and otherexpenses related to being a public company. While our revenue has grown in recent years, if ourrevenue declines or fails to grow at a rate faster than these increases in our operating expenses, wewill not be able to achieve and maintain profitability in future periods. As a result, we may continue togenerate losses. We cannot assure you that we will achieve profitability in the future or that, if we dobecome profitable, we will be able to sustain profitability.

We have experienced rapid growth in recent periods. If we fail to continue to grow and tomanage our growth effectively, we may be unable to execute our business plan, increase ourrevenue, improve our results of operations, maintain high levels of service, or adequatelyaddress competitive challenges.

We have recently experienced a period of rapid growth in our business, operations, andemployee headcount. For 2014, 2015, and 2016, our revenue was $57.6 million, $110.3 million, and$187.7 million, respectively, representing a 91% and 70% growth rate, respectively. We have alsosignificantly increased the size of our customer base from 590 customers as of December 31, 2014 toover 1,000 customers today, and we grew from 444 employees as of December 31, 2014 to 841employees as of December 31, 2016. We expect to continue to expand our operations and employeeheadcount in the near term. Our success will depend in part on our ability to continue to grow and tomanage this growth effectively.

Our recent growth has placed, and future growth will continue to place, a significant strain on ourmanagement, administrative, operational, and financial infrastructure. We will need to continue toimprove our operational, financial, and management controls, and our reporting systems andprocedures to manage the expected growth of our operations and personnel, which will requiresignificant capital expenditures and allocation of valuable management and employee resources. If wefail to implement these infrastructure improvements effectively, our ability to ensure uninterruptedoperation of key business systems and comply with the rules and regulations that are applicable topublic reporting companies will be impaired. Further, if we do not effectively manage the growth of ourbusiness and operations, the quality of our platform and services could suffer, and we may not be ableto adequately address competitive challenges. This could impair our ability to attract new customers,

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retain existing customers and expand their use of our platform, all of which would adversely affect ourbrand, overall business, results of operations and financial condition.

We currently derive substantially all of our revenue and cash flows from Anypoint Platform, andany failure of this platform to satisfy customer demands or to achieve increased marketacceptance would adversely affect our business, results of operations, financial condition, andgrowth prospects.

We derive substantially all of our revenue and cash flows from subscriptions for, and servicesrelated to, Anypoint Platform. Demand for Anypoint Platform is affected by a number of factors beyondour control, including increased market acceptance of our platform by existing customers and potentialnew customers, the extension of our platform for new use cases, the timing of development andrelease of new products by our competitors and additional capabilities and functionality by us,technological change, and growth or contraction of the market in which we compete. In addition, wecannot assure you that our platform and future enhancements to our platform will be able to addressfuture advances in technology or requirements of existing customers or potential new customers. Forexample, our platform may not be able to be used to build application networks that can scale with themassive proliferation of applications, data, and devices that reside on-premises and in the cloud. If weare unable to continue to meet customer demands or to achieve more widespread market acceptanceof our platform, our business, results of operations, financial condition and growth prospects will beadversely affected.

We began selling Anypoint Platform in 2014. Due to our limited experience selling the platform, itmay be difficult to forecast our future results of operations and subjects us to a number ofuncertainties, including the pace and degree of customer adoption of our platform. We haveencountered and will continue to encounter risks and uncertainties frequently experienced by growingcompanies operating in new or developing markets. If our assumptions regarding these uncertainties,which we use to plan our business, are incorrect or change in reaction to changes in our markets, or ifwe do not address these risks successfully, our results of operations and financial condition could differmaterially from our expectations and our business could suffer.

The market for application networks and our platform is new and unproven.

We introduced Anypoint Platform in 2014 to address the developing need to connect applications,data and devices within and between the organization and its external ecosystems. While we believethat, over time, the concept of an application network will become fundamental to an organization’score operations, the market for application networks is largely unproven and is subject to a number ofrisks and uncertainties, including:

• organizations may determine that they only need point-to-point products to address theirsoftware integration needs;

• organizations may decide that the investments needed to construct an application network aretoo significant or that such investments are better spent on other strategic initiatives within theorganization; and

• organizations may not understand the benefits that can be achieved with an applicationnetwork.

Moreover, even if the market for application networks develops, we may not be able todifferentiate the benefits of Anypoint Platform from other products that may be developed to addressthe demand for application networks. Our ability to successfully market and sell Anypoint Platform willdepend on a number of factors, including:

• our ability to support our customers as they build application networks that increase the speedat which they operate and innovate;

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• our ability to include technologies for the broadening diversity of use cases and respond to therapid evolution of new technologies;

• our ability to design and engineer our platform for ease-of-use across an organization; and

• our ability to enable customers to successfully adopt and deploy our platform in theirorganizations.

The market for application networks and our platform is still new, and therefore, it is difficult topredict the size and growth rate of this market, whether and how rapidly customers will adopt ourplatform, whether we will be able to retain such customers and expand their usage of our platform, andthe impact of competitive products and services. If the market for application networks and AnypointPlatform does not achieve significant growth or there is a reduction in demand for solutions in ourmarket for any reason, it could result in reduced customer adoption of our platform, decreasedcustomer retention, or weaker customer expansion with respect to the use of our platform, any of whichwould adversely affect our business, results of operations, and financial condition.

Our business and results of operations depend substantially on our customers renewing theirsubscriptions with us and expanding their use of our platform. Any decline in our customerrenewals or failure to convince our customers to broaden their use of our platform would harmour business, results of operations, and financial condition.

Subscriptions to our platform are term-based and are typically one year in duration. In order forus to maintain or improve our results of operations, it is important that our customers renew theirsubscriptions with us when the existing subscription term expires. While our customers are not entitledto maintain the applications developed using Anypoint Platform after the termination of a subscription,they have no obligation to renew their subscriptions upon expiration. Based on our relatively limitedexperience selling and marketing Anypoint Platform, we may not be able to accurately predictcustomer renewal rates. In addition, the growth of our business depends in part on our customersexpanding their use of our platform. We utilize our dollar-based net retention rate to measure our abilityto retain customers and expand their use of our platform. Although our dollar-based net retention ratehas historically been strong, some of our customers have elected not to renew their subscriptions withus in the past for a variety of reasons, including as a result of changes in their strategic IT priorities.Our dollar-based net retention rate may also decline or fluctuate as a result of a number of otherfactors, including our customers’ satisfaction or dissatisfaction with our platform, the increase in thecontract value of subscription and support contracts from new customers, the effectiveness of ourcustomer support services, our pricing, the prices of competing products or services, mergers andacquisitions affecting our customer base, global economic conditions, and the other risk factorsincluded herein. As a result, we cannot assure you that customers will renew subscriptions or increasetheir usage of our platform. If our customers do not renew their subscriptions or renew on lessfavorable terms, or if we are unable to expand our customers’ use of our platform, our business, resultsof operations, and financial condition may be adversely affected.

If we were unable to attract new customers in a manner that is cost-effective and assurescustomer success, we would not be able to grow our business, which would adversely affectour results of operations, and financial condition.

In order to grow our business, we must continue to attract new customers in a cost-effectivemanner and enable such customers to realize the benefits associated with an application network. Wemay not be able to attract new customers to our platform for a variety of reasons, including as a resultof their use of traditional approaches to technology integration, such as manual project-by-projectintegrations and the use of legacy point-to-point software integration products, their internal timing,

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budget or structural constraints that hinder their ability to build application networks, or the pricing ofour platform compared to products and services offered by our competitors. After a customer makes apurchasing decision, we often must also help them successfully deploying our platform in theirorganization, a process that can last several months.

Even if we do attract customers, the cost of new customer acquisition or ongoing customersupport may prove so high as to prevent us from achieving or sustaining profitability. For example, in2014, 2015, and 2016, total sales and marketing expense represented 102%, 84%, and 65% ofrevenue, respectively. We intend to continue to hire additional sales personnel, increase our marketingactivities to help educate the market about the benefits of application networks and our platform, growour domestic and international operations, and build brand awareness. We also intend to continue tocultivate the MuleSoft developer community and our partner ecosystem of systems integrators, or SIs,and independent software vendors, or ISVs. If the costs of these sales and marketing efforts increasedramatically, if we do not experience a substantial increase in leverage from our partner ecosystem, orif our sales and marketing efforts do not result in substantial increases in revenue, our business,results of operations, and financial condition may be adversely affected. In addition, we expect tocontinue to invest in our professional services organization to accelerate our customers’ ability to adoptour platform and ultimately create and expand the size of their application network over time. Wecannot assure you that any of these investments will lead to the cost-effective acquisition of additionalcustomers.

We face a number of risks in our strategy to target larger organizations for sales of ourplatform, and if we do not manage these efforts effectively, our business and results ofoperations could be adversely affected.

We are increasingly focusing our sales and marketing efforts on larger organizations. As a result,we face a number of risks with respect to this strategy. For example, we expect to incur higher costsand longer sales cycles for larger organizations, and we may be less effective at predicting when wewill complete these sales. In this market segment, the decision to invest in our platform may require agreater number of product evaluations and multiple approvals within a potential customer’sorganization, which may require us to invest more time educating these potential customers. Inaddition, larger organizations may demand more features and professional services. As a result, thesesales opportunities would likely lengthen our typical sales cycle and may require us to devote greaterresearch and development, sales, support, and professional services resources to individualcustomers. This could strain our resources and result in increased costs. Moreover, larger customersmay demand discounts in pricing, which could lower the amount of revenue we generate from anyparticular subscription. If an expected transaction is delayed until a subsequent period, or if we areunable to close one or more expected significant transactions with larger customers or potential newcustomers in a particular period, our results of operations for that period, and for any future periods inwhich revenue from such transaction would otherwise have been recognized, may be adverselyaffected. Our investments in marketing and selling to large organizations may not be successful, whichcould harm our results of operations and our overall ability to grow our customer base.

Interruptions or performance problems associated with our technology and infrastructure mayadversely affect our business, results of operations, and financial condition.

Our continued growth depends in part on the ability of our existing customers and new customersto access our platform, particularly our cloud-based deployments, at any time and within an acceptableamount of time. We have experienced, and may in the future experience, service disruptions, outagesand other performance problems due to a variety of factors, including infrastructure changes, human orsoftware errors or capacity constraints. In some instances, we may not be able to identify the cause orcauses of these performance problems within an acceptable period of time. It may become

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increasingly difficult to maintain and improve our performance as our platform becomes more complex.If our platform is unavailable or if our customers are unable to access features of our platform within areasonable amount of time or at all, our business would be negatively affected. In addition, ourinfrastructure does not currently include the real-time mirroring of data. Therefore, in the event of anyof the factors described above or other failures, customer data and other important information may bepermanently lost.

We outsource our cloud infrastructure to Amazon Web Services, or AWS, which hosts ourplatform. Our customers need to be able to access our platform at any time, without interruption ordegradation of performance. AWS runs its own platform that we access, and we are, therefore,vulnerable to service interruptions at AWS. We have experienced, and expect that in the future we mayexperience interruptions, delays and outages in service and availability from time to time due to avariety of factors, including infrastructure changes, human or software errors, website hostingdisruptions and capacity constraints. Capacity constraints could be due to a number of potentialcauses including technical failures, natural disasters, fraud or security attacks. In addition, if oursecurity, or that of AWS, is compromised, our platform is unavailable or our customers are unable touse our platform within a reasonable amount of time or at all, then our business, results of operationsand financial condition could be adversely affected. In some instances, we may not be able to identifythe cause or causes of these performance problems within a period of time acceptable to ourcustomers. It may become increasingly difficult to maintain and improve our platform performance,especially during peak usage times, as the features of our platform become more complex and theusage of our platform increases. Any of the above circumstances or events may harm our reputation,cause customers to stop using our platform, impair our ability to increase revenue from existingcustomers, impair our ability to grow our customer base, subject us to financial penalties and liabilitiesunder our service level agreements and otherwise harm our business, results of operations, andfinancial condition.

To the extent that we do not effectively anticipate capacity demands, upgrade our systems asneeded, and continually develop our technology and network architecture to accommodate actual andanticipated changes in technology, our business and results of operations may be adversely affected.Moreover, our customer agreements include warranties and service level agreements that obligate usto provide future credits for customers of our cloud offerings in the event of a significant disruption inour platform. Any unscheduled downtime that exceeds such service level commitments couldadversely affect our results of operations, financial condition, business, and reputation, which in turncould harm our ability to acquire new customers and expand relationships with existing customers.

Incorrect or improper implementation or use of our platform could result in customerdissatisfaction and negatively affect our business, results of operations, financial condition,and growth prospects.

Our platform is deployed in a wide variety of technology environments, both on-premises and inthe cloud. Increasingly, our platform has been deployed in large scale, complex technologyenvironments, and we believe our future success will depend on our ability to increase sales of ourplatform for use in such deployments. We must often assist our customers in achieving successfulimplementations of our platform, which we do through our professional services organization. The timerequired to implement our platform can range from three months for smaller deployments to six monthsor more for larger deployments. If our customers are unable to implement our platform successfully, orunable to do so in a timely manner, customer perceptions of our platform may be harmed, ourreputation and brand may suffer, and customers may choose to cease usage of our platform or not toexpand their use of our platform. Our customers and third-party partners may need training in theproper use of and the variety of benefits that can be derived from our platform to maximize its benefits.If our platform is not effectively implemented or used correctly or as intended, or if we fail to adequately

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train customers on how to efficiently and effectively use our platform, our customers may not be able tobuild application networks or otherwise achieve satisfactory outcomes. This could result in negativepublicity and legal claims against us, which may cause us to generate fewer sales to new customersand reductions in renewals or expansions of the use of our platform with existing customers, any ofwhich would harm our business and results of operations.

If our security measures are breached or unauthorized access to private or proprietary data isotherwise obtained, our platform may be perceived as not being secure, customers may reducethe use of or stop using our platform, and we may incur significant liabilities.

Because our platform allows customers to store and transmit data, there exists an inherent riskthat an unauthorized third party could conduct a security breach, resulting in the loss of this data, whichcould lead to litigation, indemnity obligations, and other liability. While we have taken steps to protectthe confidential information to which we have access, we do not have the ability to monitor or reviewthe content that our customers store or transmit through our platform. Therefore, if customers use oursoftware for the transmission or storage of personally identifiable information and our securitymeasures are breached as a result of third-party action, employee error, malfeasance or otherwise, ourreputation could be damaged, our business may suffer, and we could incur significant liability. Becausetechniques used to obtain unauthorized access or sabotage systems change frequently and generallyare not identified until they are launched against a target, we may be unable to anticipate thesetechniques or to implement adequate preventative measures. Any or all of these issues couldnegatively impact our ability to attract new customers and increase engagement by existing customers,cause existing customers to elect not to renew their subscriptions, or subject us to third-party lawsuits,regulatory fines or other action or liability, thereby adversely affecting our financial results.

If we fail to adapt and respond effectively to rapidly changing technology, evolving industrystandards, changing regulations and changing customer needs, requirements or preferences,our products may become less competitive.

The market in which we compete is relatively new and subject to rapid technological change,evolving industry standards and changing regulations, as well as changing customer needs,requirements and preferences. The success of our business will depend, in part, on our ability to adaptand respond effectively to these changes on a timely basis. If we were unable to enhance our platformor develop new solutions that keep pace with rapid technological and industry change, our business,results of operations, and financial condition could be adversely affected. If new technologies emergethat are able to deliver competitive products and services at lower prices, more efficiently, moreconveniently or more securely, such technologies could adversely impact our ability to competeeffectively. For example, Anypoint Platform was architected to connect and orchestrate applications,data and devices through the use of APIs. If new technologies emerge that displace the use of APIs,we may not be able to adapt our platform to such new technologies on a timely basis.

Our success also depends on the interoperability of our platform with third-party applications,data and devices that we have not developed and do not control. Any changes in such applications,data or devices that degrade the functionality of our platform or give preferential treatment tocompetitive software could adversely affect the adoption and usage of our platform. We may not besuccessful in adapting our platform to operate effectively with these applications, data, or devices. If itis difficult for our customers to access and use our platform, or if our platform cannot connect abroadening range of applications, data and devices, then our customer growth and retention may beharmed, and our business and results of operations could be adversely affected.

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Our future quarterly results may fluctuate significantly, and if we fail to meet the expectationsof analysts or investors, our stock price and the value of your investment could declinesubstantially.

Our results of operations, including our revenue, operating expenses and cash flows havefluctuated from quarter to quarter in the past and may continue to fluctuate as a result of a variety offactors, many of which are outside of our control, may be difficult to predict and may or may not fullyreflect the underlying performance of our business. Some of the factors that may cause our results ofoperations to fluctuate from quarter to quarter include:

• the mix of revenue and associated costs attributable to subscriptions and support andprofessional services, which may impact our gross margins and operating income;

• our ability to attract new customers;

• our ability to retain customers and expand their usage of our platform, particularly for ourlargest customers;

• delays in closing sales, including the timing of renewals, which may result in revenue beingpushed into the next quarter, particularly because a large portion of our sales occur toward theend of each quarter;

• the timing of revenue recognition;

• the mix of revenue attributable to larger transactions as opposed to smaller transactions;

• changes in customers’ budgets and in the timing of their purchasing decisions;

• potential customers opting for alternative products, including developing their own in-housesolutions;

• our ability to control costs, including our operating expenses;

• the timing and success of new products, features and services by us and our competitors orany other change in the competitive dynamics of our industry, including consolidation amongcompetitors, customers or strategic partners;

• significant security breaches of, technical difficulties with, or interruptions to, the delivery anduse of our platform;

• the collectability of receivables from customers and resellers, which may be hindered ordelayed if these customers or resellers experience financial distress;

• general economic conditions, both domestically and internationally, as well as economicconditions specifically affecting industries in which our customers participate;

• sales tax and other tax determinations by authorities in the jurisdictions in which we conductbusiness;

• the impact of new accounting pronouncements; and

• fluctuations in stock-based compensation expense.

The occurrence of one or more of the foregoing and other factors may cause our results ofoperations to vary significantly. We also intend to continue to invest significantly to grow our businessin the near future rather than optimizing for profitability or cash flows. Accordingly, our results ofoperations in any one quarter may not be meaningful and should not be relied upon as indicative offuture performance. Additionally, if our quarterly results of operations fall below the expectations ofinvestors or securities analysts who follow our stock, the price of our Class A common stock coulddecline substantially, and we could face costly lawsuits, including securities class action suits.

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We may not be able to compete successfully against current and future competitors.

We believe that we are the pioneer in the market for application networks because we provide theonly complete offering for building application networks. However, there are many other companiesaddressing various aspects of this market. As a result, the competitive landscape is fragmented,intense and characterized by rapid changes in technology, customer requirements, and industrystandards and by frequent new product introductions and improvements. We are likely to facecontinued challenges from current competitors, which include:

• manual integration efforts, which are either conducted in-house or through custom integrationservices providers;

• legacy integration software vendors such as IBM, Oracle, and TIBCO; and

• smaller specialized companies such as Apigee (recently acquired by Google), which arefocused on various niches in integration and API management.

Many of our principal competitors have substantially longer operating histories, greater financial,technical, marketing or other resources, stronger brand and customer recognition, larger intellectualproperty portfolios and broader global distribution and presence. Our competitors may be able to offerproducts or functionality similar to ours at a more attractive price than we can by integrating or bundlingsuch products with their other product offerings. Acquisitions and consolidation in our industry mayprovide our competitors even more resources or may increase the likelihood of our competitors offeringbundled or integrated products with which we cannot effectively compete. In addition, we face potentialcompetition from participants in adjacent markets that may enter our markets by leveraging relatedtechnologies and partnering with or acquiring other companies, or providing alternative approaches toprovide similar results, particularly as organizations are increasingly choosing to deploy applications oncloud platforms such as those offered by AWS, Microsoft Azure, and Google Cloud Platform. Newinnovative start-ups and existing large companies that are making significant investments in researchand development could also launch new products and services, delivered either on-premises or in thecloud, that we do not offer and that could gain market acceptance quickly. If we were unable toanticipate or react to these competitive challenges, our competitive position would weaken, whichwould adversely affect our business and results of operations.

Real or perceived errors, failures or bugs in our software could adversely affect our business,results of operations, financial condition, and growth prospects.

Our platform is complex, and therefore, undetected errors, failures or bugs may occur. Ourplatform may be used in IT environments with different operating systems, system managementsoftware, applications, devices, databases and equipment and networking configurations, which maycause errors or failures of our platform or other aspects of the IT environment into which it is deployed.Despite testing by us, errors, failures or bugs may not be found until our platform is used by ourcustomers. Real or perceived errors, failures or bugs in our products could result in negative publicity,loss of or delay in market acceptance of our platform, weakening of our competitive position, claims bycustomers for losses sustained by them or failure to meet the stated service level commitments in ourcustomer agreements. In such an event, we may be required, or may choose, for customer relations orother reasons, to expend significant additional resources in order to help correct the problem. We haveexperienced from time to time errors, failures and bugs in our platform that have resulted in customerdowntime. While we were able to remedy these situations, we cannot assure you that we will be able tomitigate future errors, failures or bugs in a quick or cost-effective manner. Any errors, failures or bugsin our platform could impair our ability to attract new customers, retain existing customers or expandtheir use of our platform, which would adversely affect our business, results of operations, and financialcondition.

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The estimates of market opportunity and forecasts of market growth included in thisprospectus may prove to be inaccurate, and even if the market in which we compete achievesthe forecasted growth, our business could fail to grow at similar rates, if at all.

Market opportunity estimates and growth forecasts included in this prospectus, including thosewe have generated ourselves, are subject to significant uncertainty and are based on assumptions andestimates that may not prove to be accurate. Even if the market in which we compete meets the sizeestimates and growth forecasted in this prospectus, our business could fail to grow for a variety ofreasons, which would adversely affect our results of operations. For more information regarding theestimates of market opportunity and the forecasts of market growth included in this prospectus, see thesection titled “Market and Industry Data.”

Our sales cycle is long and unpredictable, and our sales efforts require considerable time andexpense.

The timing of our sales and related revenue recognition is difficult to predict because of the lengthand unpredictability of the sales cycle for our platform before a sale. We are often required to spendsignificant time and resources to better educate and familiarize potential customers with the valueproposition of our platform. Customers often view the subscription to our platform as a strategicdecision and significant investment and, as a result, frequently require considerable time to evaluate,test and qualify our platform prior to entering into or expanding a subscription. During the sales cycle,we expend significant time and money on sales and marketing and contract negotiation activities,which may not result in a sale. Additional factors that may influence the length and variability of oursales cycle include:

• the discretionary nature of purchasing and budget cycles and decisions;

• lengthy purchasing approval processes;

• the evaluation of competing products during the purchasing process;

• announcements or planned introductions of new products, features or functionality by us or ourcompetitors; and

• evolving functionality demands.

As we have focused our business on selling into larger customer accounts, we have experiencedan increase in our average sales cycle from two to three quarters. As a result, it is difficult to predictwhether and when a sale will be completed, and when revenue from a sale will be recognized. If oursales cycles continue to lengthen, our revenue could be lower than expected, which would have anadverse effect on our business, results of operations and financial condition.

We recognize a majority of our revenue over the term of our customer contracts. Consequently,increases or decreases in new sales may not be immediately reflected in our results ofoperations and may be difficult to discern.

We recognize subscription revenue from customers ratably over the terms of their subscriptionsand a substantial majority of our revenue is derived from subscriptions that have terms of at least oneyear. As a result, a portion of the revenue we report in each quarter is derived from the recognition ofdeferred revenue relating to subscriptions entered into during previous quarters. Consequently, adecline in new or renewed subscriptions in any single quarter may have a small impact on the revenuethat we recognize for that quarter. However, such a decline will negatively affect our revenue in futurequarters. Accordingly, the effect of significant downturns in sales and potential changes in our pricingpolicies or rate of customer expansion or retention, may not be fully reflected in our results ofoperations until future periods. In addition, a significant majority of our costs are expensed as incurred,

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while revenue is recognized over the life of the subscription agreement. As a result, growth in thenumber of customers could continue to result in our recognition of higher costs and lower revenue inthe earlier periods of our subscription agreements. Finally, our subscription-based revenue model alsomakes it difficult for us to rapidly increase our revenue through additional sales in any period, asrevenue from new customers and significant increases in the size of subscriptions with existingcustomers must be recognized over the applicable subscription term.

If we do not effectively expand our sales and marketing organization, we may be unable to addnew customers or increase sales to our existing customers.

Increasing our customer base and achieving broader market acceptance of our platform willdepend, to a significant extent, on our ability to effectively expand our sales and marketing operationsand activities. We are substantially dependent on our direct sales force and our online marketingefforts to obtain new customers. We plan to continue to expand our sales and marketing organizationboth domestically and internationally. We believe that there is significant competition for experiencedsales professionals with the sales skills and technical knowledge that we require, particularly as wecontinue to target larger organizations. Our ability to achieve significant revenue growth in the futurewill depend, in part, on our success in recruiting, training and retaining a sufficient number ofexperienced sales professionals. New hires require significant training and time before they achieve fullproductivity, particularly in new sales segments and territories. Our recent hires and planned hires maynot become as productive as quickly as we expect, and we may be unable to hire or retain sufficientnumbers of qualified individuals in the future in the markets where we do business. Because of ourlimited operating history, we cannot predict whether, or to what extent, our sales will increase as weexpand our sales and marketing organization or how long it will take for sales personnel to becomeproductive. Our business and results of operations will be harmed if the expansion of our sales andmarketing organization does not generate a significant increase in revenue.

We depend on highly skilled personnel to grow and operate our business, and if we are unableto hire, retain, train and motivate our personnel, we may not be able to effectively grow ourbusiness and improve our results of operations.

We depend on highly skilled personnel, including our senior management, to grow and operateour business. Our future success will depend upon our continued ability to identify and hire skilledpersonnel, including senior management, engineers, product managers and sales and marketingpersonnel, which will require significant time, expense and attention. We have aggressive hiringobjectives across the organization, which we may not be able to achieve. In addition to hiring newemployees, we must continue to focus on training, motivating, and retaining our best employees,substantially all of whom are at-will employees, which means they may terminate their employmentrelationship with us at any time. Many of our employees may be able to receive significant proceedsfrom sales of our Class A common stock in the public markets after this offering, which may reducetheir motivation to continue to work for us. Conversely, employees may be more likely to leave us if theexercise prices of the stock options that they hold are significantly above the market price of ourClass A common stock. Competition for highly skilled personnel is intense, particularly in the SanFrancisco Bay Area, where our headquarters are located. We may need to invest significant amountsof cash and equity to attract and retain new employees, and we may never realize returns on theseinvestments. If we are not able to fulfill our hiring objectives and retain employees, our ability toachieve our strategic objectives would be adversely impacted, and our business and results ofoperations would be harmed.

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Our corporate culture has contributed to our success, and if we cannot maintain this culture aswe grow, we could lose the innovation, creativity and teamwork fostered by our culture, whichcould harm our business.

We believe that our culture has been and will continue to be a key contributor to our success.Since December 31, 2014, we have increased the size of our workforce by over 390 employees, andwe expect to continue to hire aggressively as we expand. If we do not continue to maintain ourcorporate culture as we grow, we may be unable to foster the innovation, creativity, and teamwork webelieve we need to support our growth. Moreover, many of our employees may be able to receivesignificant proceeds from sales of our Class A common stock in the public markets after this offering,which could lead to disparities of wealth among our employees that adversely affects relations amongemployees and our culture in general. Our substantial anticipated headcount growth and our transitionfrom a private company to a public company may result in a change to our corporate culture, whichcould harm our business.

If we were not able to introduce new features, solutions or services successfully and to makeenhancements to our platform or services, our business and results of operations could beadversely affected.

Our ability to attract new customers and increase revenue from existing customers depends inlarge part on our ability to enhance and improve our platform and to introduce new features, solutions,and services. To grow our business and remain competitive, we must enhance our platform anddevelop features and solutions that reflect the constantly evolving nature of technology and ourcustomers’ needs. The success of these and any other enhancements or developments depend onseveral factors, including timely introduction and completion, sufficient demand and cost effectiveness.In addition, because our platform is designed to operate with a variety of systems, applications, dataand devices, we will need to continuously modify and enhance our platform to keep pace with changesin such systems. We may not be successful in developing these modifications and enhancements.Furthermore, the addition of features and solutions to our platform will increase our research anddevelopment expenses. Any new features or solutions that we develop may not be introduced in atimely or cost-effective manner or may not achieve the market acceptance necessary to generatesufficient revenue to justify the related expenses. It is difficult to predict customer adoption of newfeatures or solutions. Such uncertainty limits our ability to forecast our future results of operations andsubjects us to a number of challenges, including our ability to plan for and model future growth. If wecannot address such uncertainties successfully and are unable to successfully develop new features orsolutions, enhance our platform or otherwise overcome technological challenges and competingtechnologies, our business and results of operations could be adversely affected. We also offerprofessional services for the implementation of, and training on, our platform and must continuallyadapt to assist our customers in deploying our platform and building an application network inaccordance with their specific IT strategy. If we cannot introduce new services or enhance our existingservices to keep pace with changes in our customers’ deployment strategies, we may not be able toattract new customers, retain existing customers and expand their use of our platform, which couldadversely affect our business, results of operations and financial condition.

We expect to continue to derive a significant portion of our revenue from professional services,which carry a lower gross margin than our subscription and support revenue.

We generally offer professional services associated with implementing our platform and trainingcustomers on the use of our platform, and our professional services carry a significantly lower grossmargin than subscriptions for our platform. We price our professional services to be attractive tocustomers because we believe that our professional services help ensure customer success on ourplatform, which assists us in retaining customers and expanding our relationships with them. Further,

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we generally recognize revenue from professional services as such services are rendered. Costsassociated with maintaining a professional services organization are fixed while professional servicesrevenue is dependent on the amount of work actually billed to customers in a period, the combinationof which may result in variability in our gross profit. In addition, the timing of the recognition ofprofessional services revenue is dependent on several factors outside our control. If a customerdeploys our platform and utilizes our services more slowly than we expect, we may not be able torecognize the related revenue as quickly as we anticipated, which may adversely affecting our grossprofit and other results of operations. We also work with SIs to provide our customers with professionalservices associated with implementing our platform, and we plan to continue to expand these partnerrelationships to supplement our own resources. If we are not able to adequately grow these channelpartner relationships, we will continue to directly provide a significant majority of these services to ourcustomers.

Any failure to offer high-quality customer support may adversely affect our relationships withour customers and our financial results.

We typically bundle customer support with subscriptions for our platform. In deploying and usingour platform, our customers typically require the assistance of our support teams to resolve complextechnical and operational issues. We may be unable to modify the nature, scope and delivery of ourcustomer support to compete with changes in product support services provided by our competitors.Increased customer demand for support, without corresponding revenue, could increase costs andadversely affect our results of operations. We may also be unable to respond quickly enough toaccommodate short-term increases in customer demand for support. Our sales are highly dependenton our reputation and on positive recommendations from our existing customers. Any failure tomaintain high-quality customer support, or a market perception that we do not maintain high-qualityproduct support, could adversely affect our reputation, and our ability to sell subscriptions to ourplatform to existing customers and new customers.

Future changes in market conditions or customer demand could require changes to our pricesor pricing model, which could adversely affect our business, results of operations, andfinancial condition.

We price subscriptions to our platform based on the amount of computing capacity on which ourcustomers run our software, as well as the tier of support services, and subscriptions to our platformare typically one year in duration. We have limited experience with respect to determining the optimalprices and pricing model for our platform and services. As the market for our platform matures, or asnew competitors introduce new products or services that compete with ours, we may be unable toattract new customers at the same price or based on the same pricing models as we have usedhistorically. For example, from time to time, customers request pricing that dynamically scales up ordown based on actual usage, which is different than our 12-month capacity-based pricing. If thiscustomer demand becomes more prevalent, we may be forced to adjust our pricing model. Any futurechanges in our pricing model could result in decreased revenue or interfere with the predictability of ourbusiness. Moreover, larger organizations, which are a primary focus of our sales efforts, may demandsubstantial price concessions. As a result, in the future we may be required to reduce our prices, whichcould adversely affect our business, results of operations and financial condition.

If we are not able to maintain and enhance our brand, our business and results of operationsmay be adversely affected.

We believe that maintaining and enhancing our reputation as a pioneer and leader in the marketfor application networks is critical to our relationship with our existing customers and partners and ourability to attract new customers and partners. The successful promotion of our brand attributes will

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depend on a number of factors, including our marketing efforts, our ability to continue to develop high-quality features and solutions for our platform and our ability to successfully differentiate our platformfrom competitive products and services. Our brand promotion activities may not be successful or yieldincreased revenue. In addition, independent industry analysts often provide reviews of our platform, aswell as products and services of our competitors, and perception of our platform in the marketplacemay be significantly influenced by these reviews. If these reviews are negative, or less positive ascompared to those of our competitors’ products and services, our brand may be adversely affected.Additionally, the performance of our channel partners may affect our brand and reputation if customersdo not have a positive experience with our partners’ services. The promotion of our brand requires usto make substantial expenditures, and we anticipate that the expenditures will increase as our marketbecomes more competitive, as we expand into new markets, and as more sales are generated throughour channel partners. To the extent that these activities yield increased revenue, this revenue may notoffset the increased expenses we incur. If we do not successfully maintain and enhance our brand, ourbusiness may not grow, we may have reduced pricing power relative to competitors, and we could losecustomers or fail to attract potential customers, all of which would adversely affect our business, resultsof operations and financial condition.

Our business and growth depend in part on the success of our relationships with our channelpartners.

In addition to our direct sales force, we use SIs and value added resellers, or VARs. We derive asignificant portion of our revenue from sales through our channel network, particularly internationally.We expect that sales through channel partners will continue to grow for the foreseeable future.

Our agreements with our channel partners are generally non-exclusive, meaning our channelpartners may offer customers the products of several different companies, including products thatcompete with our platform. If our channel partners do not effectively market and sell subscriptions toour platform, choose to use greater efforts to market and sell their own products or those of ourcompetitors, or fail to meet the needs of our customers, our ability to grow our business and sellsubscriptions to our platform may be adversely affected. Our channel partners may cease marketingour platform with limited or no notice and with little or no penalty. The loss of a substantial number ofour channel partners, our possible inability to replace them, or the failure to recruit additional channelpartners could adversely affect our business, results of operations and financial condition.

We depend in part on our ecosystem of SIs and developers to create solutions that will work inconjunction with our platform.

We depend in part on our partner ecosystem of SIs and developers to create solutions that willwork in conjunction with our platform. This presents certain risks to our business, including:

• we cannot provide any assurance that these solutions meet the same quality standards that weapply to our own development efforts, and to the extent that they contain bugs or defects, theymay create disruptions in our customers’ use of our services or negatively affect our brand;

• we do not typically provide technical support for solutions developed by our partner ecosystem,and customers may be left without support and potentially cease using our services if these SIsand developers do not provide adequate support for those solutions; and

• these SIs and developers may not possess the appropriate intellectual property rights todevelop and share their solutions.

Many of these risks are not within our control to prevent, and our brand may be damaged if thesesolutions do not perform to our customers’ satisfaction and that dissatisfaction is attributed to us, whichwould adversely affect our business and results of operations.

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Our corporate structure and intercompany arrangements are subject to the tax laws of variousjurisdictions, and we could be obligated to pay additional taxes, which would harm our resultsof operations.

Based on our current corporate structure, we may be subject to taxation in several jurisdictionsaround the world with increasingly complex tax laws, the application of which can be uncertain. Theamount of taxes we pay in these jurisdictions could increase substantially as a result of changes in theapplicable tax principles, including increased tax rates, new tax laws or revised interpretations ofexisting tax laws and precedents. In addition, the authorities in these jurisdictions could challenge ourmethodologies for valuing developed technology or intercompany arrangements, including our transferpricing. The relevant taxing authorities may determine that the manner in which we operate ourbusiness does not achieve the intended tax consequences. If such a disagreement were to occur, andour position were not sustained, we could be required to pay additional taxes, and interest andpenalties. Such authorities could claim that various withholding requirements apply to us or oursubsidiaries or assert that benefits of tax treaties are not available to us or our subsidiaries. Anyincrease in the amount of taxes we pay or that are imposed on us could increase our worldwideeffective tax rate and harm our business and results of operations.

We could incur substantial costs in protecting or defending our intellectual property rights, andany failure to protect our intellectual property rights could reduce the value of our platform andbrand.

Our success and ability to compete depend in part upon our intellectual property rights. Wecurrently have one issued patent and three patent applications, which may not result in issued patents.We primarily rely on copyright, trademark laws, trade secret protection and confidentiality or othercontractual arrangements with our employees, customers, partners and others to protect ourintellectual property rights. However, the steps we take to protect our intellectual property rights maynot be adequate. In order to protect our intellectual property rights, we may be required to spendsignificant resources to set-up, monitor and enforce such rights. Litigation brought to enforce ourintellectual property rights could be costly, time-consuming and distracting to management and couldbe met with defenses, counterclaims and countersuits attacking the validity and enforceability of ourintellectual property rights, which may result in the impairment or loss of portions of our intellectualproperty. The laws of some foreign countries do not protect our intellectual property rights to the sameextent as the laws of the United States, and effective intellectual property protection and mechanismsmay not be available in those jurisdictions. We may need to expend additional resources to defend ourintellectual property in these countries, and our inability to do so could impair our business or adverselyaffect our international expansion. Even if we are able to secure our intellectual property rights, therecan be no assurances that such rights will provide us with competitive advantages or distinguish ourproducts and services from those of our competitors or that our competitors will not independentlydevelop similar technology.

We may be subject to intellectual property rights claims by third parties, which may be costly todefend, could require us to pay significant damages and could limit our ability to use certaintechnologies.

Companies in the software and technology industries, including some of our current and potentialcompetitors, own large numbers of patents, copyrights, trademarks and trade secrets and frequentlyenter into litigation based on allegations of infringement or other violations of intellectual propertyrights. We have in the past and may in the future be subject to notices that claim we havemisappropriated, misused or infringed the intellectual property rights of our competitors or other thirdparties, including patent holding companies whose sole business is to assert such claims. To theextent we increase our visibility in the market, we face a higher risk of being the subject of intellectual

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property infringement claims. Additionally, we do not have a significant patent portfolio, which couldprevent us from deterring patent infringement claims through our own patent portfolio, and ourcompetitors and others may now and in the future have significantly larger and more mature patentportfolios than we have.

Any intellectual property claims, with or without merit, could be very time-consuming andexpensive and could divert our management’s attention and other resources. These claims could alsosubject us to significant liability for damages, potentially including treble damages if we are found tohave willfully infringed patents or copyrights. These claims could also result in our having to stop usingtechnology found to be in violation of a third party’s rights. We might be required to seek a license forthe intellectual property, which may not be available on reasonable terms or at all. Even if a license isavailable, we could be required to pay significant royalties, which would increase our operatingexpenses. As a result, we may be required to develop alternative non-infringing technology, whichcould require significant effort and expense. If we cannot license or develop technology for any aspectof our business that may ultimately be determined to infringe on the intellectual property rights ofanother party, we could be forced to limit or stop sales of subscriptions to our platform and may beunable to compete effectively. Any of these results would adversely affect our business, results ofoperations and financial condition.

Some of our technology incorporates “open source” software, and we license some of oursoftware through open source projects, which could negatively affect our ability to sell ourplatform and subject us to possible litigation.

Some aspects of our platform are built using open source software, and we intend to continue touse open source software in the future. From time to time, we contribute software source code to opensource projects under open source licenses or release internal software projects under open sourcelicenses, and anticipate doing so in the future. The terms of certain open source licenses to which weare subject have not been interpreted by U.S. or foreign courts, and there is a risk that open sourcesoftware licenses could be construed in a manner that imposes unanticipated conditions or restrictionson our ability to monetize our platform. Additionally, we may from time to time face claims from thirdparties claiming ownership of, or demanding release of, the open source software or derivative worksthat we developed using such software, which could include our proprietary source code, or otherwiseseeking to enforce the terms of the applicable open source license. These claims could result inlitigation and could require us to make our software source code freely available, purchase a costlylicense or cease offering the implicated services unless and until we can re-engineer them to avoidinfringement. This re-engineering process could require significant additional research anddevelopment resources, and we may not be able to complete it successfully. In addition to risks relatedto license requirements, use of certain open source software can lead to greater risks than use of third-party commercial software, as open source licensors generally do not provide warranties or controls onthe origin of software. Additionally, because any software source code we contribute to open sourceprojects is publicly available, our ability to protect our intellectual property rights with respect to suchsoftware source code may be limited or lost entirely, and we may be unable to prevent our competitorsor others from using such contributed software source code. Any of these risks could be difficult toeliminate or manage, and if not addressed, could have a negative effect on our business, results ofoperations and financial condition.

We use third-party licensed software in or with our platform, and the inability to maintain theselicenses or errors in the software we license could result in increased costs or reduced servicelevels, which would adversely affect our business.

Our platform incorporates certain third-party software obtained under licenses from othercompanies. We anticipate that we will continue to rely on such third-party software and development

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tools in the future. Such third-party companies may discontinue their products, go out of business orotherwise cease to make support available for such third-party software. Although we believe that thereare commercially reasonable alternatives to the third-party software we currently license, this may notalways be the case, or it may be difficult or costly to replace. In addition, integration of the softwareused in our platform with new third-party software may require significant work and substantialinvestment of our time and resources. Also, to the extent that our platform depends upon thesuccessful operation of third-party software in conjunction with our software, any undetected errors ordefects in such third-party software could prevent the deployment or impair the functionality of ourplatform, delay new feature introductions, result in a failure of our platform and injure our reputation.Our use of additional or alternative third-party software would require us to enter into licenseagreements with third parties. In the event that we are not able to maintain our licenses to third-partysoftware, or cannot obtain licenses to new software as needed to enhance our platform, our businessand results of operations may be adversely affected.

Indemnity provisions in various agreements potentially expose us to substantial liability forintellectual property infringement and other losses.

Our agreements with customers and other third parties may include indemnification provisionsunder which we agree to indemnify them for losses suffered or incurred as a result of claims ofintellectual property infringement, damages caused by us to property or persons, or other liabilitiesrelating to or arising from our platform, services or other contractual obligations. Some of theseindemnity agreements provide for uncapped liability for which we would be responsible, and someindemnity provisions survive termination or expiration of the applicable agreement. Large indemnitypayments could harm our business, results of operations and financial condition. Although we normallycontractually limit our liability with respect to such obligations, we may still incur substantial liabilityrelated to them. Any dispute with a customer with respect to such obligations could have adverseeffects on our relationship with that customer and other existing customers and new customers andharm our business and results of operations.

Our international sales and international operations subject us to additional risks that canadversely affect our results of operations and financial condition.

In 2014, 2015, and 2016, we derived approximately 36%, 37%, and 38% of our revenue fromcustomers located outside the United States. We are continuing to expand our international operationsas part of our growth strategy. We currently have a significant portion of our research and developmentpersonnel in Argentina and have a significant portion of our sales personnel and customer supportoperations in Europe, Asia, Australia and South America. However, our sales organization outside theUnited States is smaller than our sales organization in the United States, and we rely more on resellersfor non-U.S. sales. Our ability to convince customers to adopt our platform and to expand usage of ourplatform often requires our direct engagement with customers. To the extent we are unable to engagewith non-U.S. customers, we may struggle to grow sales in international markets.

Our international operations subject us to a variety of risks and challenges, including:

• political and economic uncertainty in the locations in which we operate, particularly inArgentina, where we have a development center, including the potential for significant inflation,labor unrest and currency devaluation;

• increased management, travel, infrastructure and legal compliance costs associated withhaving operations in multiple jurisdictions;

• greater challenges in hiring, training, motivating, and retaining high-quality personnel;

• increased difficulties in maintaining our unique corporate culture as we continue to expandglobally;

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• reliance on channel partners;

• longer sales cycle and more time required to educate customers on the benefits of our platformoutside of the United States;

• more challenges in enabling our sales force to reach larger organizations outside of the UnitedStates;

• longer payment cycles and difficulties in collecting accounts receivable, especially in emergingmarkets;

• increased financial accounting and reporting burdens and complexities;

• compliance with U.S. laws and regulations for foreign operations, including the Foreign CorruptPractices Act, the U.K. Bribery Act, import and export control laws, tariffs, trade barriers,economic sanctions and other regulatory or contractual limitations on our ability to sellsubscriptions to our software in certain foreign markets, and the risks and costs of non-compliance;

• heightened risks of unfair or corrupt business practices in certain geographies and of improperor fraudulent sales arrangements that may impact results of operations and result inrestatements of our consolidated financial statements and irregularities in our consolidatedfinancial statements;

• fluctuations in currency exchange rates, particularly in Argentina, and the related effect on ourresults of operations;

• difficulties in repatriating or transferring funds from or converting currencies in certaincountries;

• the need for localized software and licensing programs;

• reduced protection for intellectual property rights in some countries and practical difficulties ofenforcing intellectual property and contract rights abroad;

• compliance with the laws of numerous foreign taxing jurisdictions and overlapping of differenttax regimes including withholding obligations; and

• difficulties associated with delivering support, training and documentation in languages otherthan English.

Any of the above risks could adversely affect our international operations, reduce our revenuefrom customers outside of the United States or increase our operating costs, each of which couldadversely affect our business, results of operations, financial condition and growth prospects. Inaddition, compliance with laws and regulations applicable to our international operations increases ourcost of doing business in foreign jurisdictions. We may be unable to keep current with changes inforeign government requirements and laws as they change from time to time. Failure to comply withthese laws and regulations could have adverse effects on our business. In many foreign countries it iscommon for others to engage in business practices that are prohibited by our internal policies andprocedures or U.S. regulations applicable to us. Although we have implemented policies andprocedures designed to ensure compliance with these laws and policies, there can be no assurancethat all of our employees, contractors, channel partners and agents will comply with these laws andpolicies. Violations of laws or key control policies by our employees, contractors, channel partners oragents could result in delays in revenue recognition, financial reporting misstatements, fines, penaltiesor the prohibition of the importation or exportation of our software and services and could have anadverse effect on our business, results of operations and financial condition.

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A significant number of our research and development employees are located in Argentina andany favorable or unfavorable developments in Argentina could have an impact on our results ofoperations.

A significant number of our research and development employees are located in Argentina, andtherefore, a portion of our operating expenses are denominated in Argentine pesos. As ofDecember 31, 2016, we had a total of 156 employees located in Argentina, of which 106 wereengaged in research and development activities. If the peso strengthens against the U.S. dollar, itcould have a negative impact on our results of operations as it would increase our operating expenses.Our business activities in Argentina also subject us to risks associated with changes in andinterpretations of Argentine law, including laws related to employment, the protection and ownership ofintellectual property and U.S. ownership of Argentine operations. Furthermore, if we had to scale downor close our Argentine operations, there would be significant time and cost required to relocate thoseoperations elsewhere, which could have an adverse impact on our overall cost structure.

The Argentine government has historically exercised significant influence over the country’seconomy. Additionally, the country’s legal and regulatory frameworks have at times suffered radicalchanges, due to political influence and significant political uncertainties. In the past, governmentpolicies in Argentina included expropriation, nationalization, forced renegotiation or modification ofexisting contracts, suspension of the enforcement of creditors’ rights, new taxation policies, includingroyalty and tax increases and retroactive tax claims, and changes in laws and policies affecting foreigntrade and investment. Such policies could destabilize the country and adversely affect our businessand operating expenses.

In addition, Argentina has experienced labor unrest over wages and benefits paid to workers. Inthe past, the Argentine government has passed laws, regulations, and decrees requiring companies inthe private sector to maintain minimum wage levels and provide specified benefits to employees andmay do so again in the future. Employers have also experienced significant pressure from theiremployees and labor organizations to increase wages and to provide additional employee benefits.Any disruptions, labor unrest, or increased personnel-related expenses in Argentina could have amaterial and adverse effect on our business and operating expenses.

If currency exchange rates fluctuate substantially in the future, our financial results, which arereported in U.S. dollars, could be adversely affected.

As we continue to expand our international operations, we become more exposed to the effectsof fluctuations in currency exchange rates. Our sales contracts are denominated primarily in U.S.dollars, and therefore the majority of our revenue are not subject to foreign currency risk. However, astrengthening of the U.S. dollar could increase the real cost of our platform and services to ourcustomers outside of the United States, adversely affecting our business, results of operations andfinancial condition. We incur expenses for employee compensation and other operating expenses atour non-U.S. locations in the local currency. Fluctuations in the exchange rates between the U.S. dollarand other currencies, such as the Argentine peso, could result in the dollar equivalent of suchexpenses being higher. This could have a negative impact on our reported results of operations. Todate, we have not engaged in any hedging strategies, and any such strategies, such as forwardcontracts, options and foreign exchange swaps related to transaction exposures that we mayimplement in the future to mitigate this risk may not eliminate our exposure to foreign exchangefluctuations. Moreover, the use of hedging instruments may introduce additional risks if we are unableto structure effective hedges with such instruments.

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Unfavorable conditions in our industry or the global economy or reductions in informationtechnology spending could limit our ability to grow our business and negatively affect ourresults of operations.

Our results of operations may vary based on the impact of changes in our industry or the globaleconomy on us or our customers. The revenue growth and potential profitability of our businessdepend on demand for integration software and services generally and for our platform in particular.Current or future economic uncertainties or downturns could adversely affect our business and resultsof operations. Negative conditions in the general economy both in the United States and abroad,including conditions resulting from changes in gross domestic product growth, financial and creditmarket fluctuations, political turmoil, natural catastrophes, warfare and terrorist attacks on the UnitedStates, Europe, the Asia Pacific region or elsewhere, could cause a decrease in business investments,including spending on information technology, and negatively affect the growth of our business. To theextent our platform is perceived by customers and potential customers as discretionary, our revenuemay be disproportionately affected by delays or reductions in general information technology spending.Also, customers may choose to develop in-house software as an alternative to using our platform.Moreover, competitors may respond to market conditions by lowering prices and attempting to lureaway our customers. In addition, the increased pace of consolidation in certain industries may result inreduced overall spending on our platform. We cannot predict the timing, strength or duration of anyeconomic slowdown, instability or recovery, generally or within any particular industry. If the economicconditions of the general economy or markets in which we operate do not improve, or worsen frompresent levels, our business, results of operations and financial condition could be adversely affected.

We are subject to governmental export and import controls that could impair our ability tocompete in international markets due to licensing requirements and subject us to liability if weare not in compliance with applicable laws.

Our platform is subject to export controls, including the U.S. Department of Commerce’s ExportAdministration Regulations and various economic and trade sanctions regulations administered by theU.S. Treasury Department’s Office of Foreign Assets Controls. The U.S. export control laws and U.S.economic sanctions laws include prohibitions on the sale or supply of certain products and services toU.S. embargoed or sanctioned countries, governments, persons and entities and also requireauthorization for the export of encryption items. In addition, various countries regulate the import ofcertain encryption technology, including through import permitting and licensing requirements, andhave enacted laws that could limit our ability to distribute our platform or could limit our customers’ability to implement our platform in those countries. Although we take precautions to prevent ourplatform from being provided or deployed in violation of such laws, our platform may have been in thepast, and could in the future be, provided inadvertently in violation of such laws, despite theprecautions we take. For example, in September 2016, we filed a voluntary self-disclosure regardingour past failure to seek and receive an export license prior to distribution of encrypted software. Inresponse to this voluntary self-disclosure, we received a written warning from the U.S. Department ofCommerce’s Bureau of Industry and Security. If we fail to comply with these laws, we and ouremployees could be subject to civil or criminal penalties, including the possible loss of exportprivileges, monetary penalties, and, in extreme cases, imprisonment of responsible employees forknowing and willful violations of these laws. We may also be adversely affected through penalties,reputational harm, loss of access to certain markets, or otherwise.

Changes in our platform, or changes in export, sanctions and import laws, may delay theintroduction and sale of subscriptions to our platform in international markets, prevent our customerswith international operations from deploying our platform or, in some cases, prevent the provision ofour platform to certain countries, governments, persons or entities altogether. Any change in export orimport regulations, economic sanctions or related laws, shift in the enforcement or scope of existing

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regulations, or change in the countries, governments, persons or technologies targeted by suchregulations, could result in decreased use of our platform, or in our decreased ability to export or sellsubscriptions to our platform to existing customers or potential new customers with internationaloperations. Any decreased use of our platform or limitation on our ability to export or sell subscriptionsto our platform could adversely affect our business, results of operations and financial condition.

Failure to comply with anti-bribery, anti-corruption, and anti-money laundering laws couldsubject us to penalties and other adverse consequences.

We are subject to the Foreign Corrupt Practices Act, or FCPA, the U.K. Bribery Act and otheranti-corruption, anti-bribery and anti-money laundering laws in various jurisdictions both domestic andabroad. We leverage third parties, including channel partners, to sell subscriptions to our platform andconduct our business abroad. We and our third-party intermediaries may have direct or indirectinteractions with officials and employees of government agencies or state-owned or affiliated entitiesand may be held liable for the corrupt or other illegal activities of these third-party business partnersand intermediaries, our employees, representatives, contractors, channel partners, and agents, even ifwe do not explicitly authorize such activities. While we have policies and procedure to addresscompliance with such laws, we cannot assure you that all of our employees and agents will not takeactions in violation of our policies and applicable law, for which we may be ultimately held responsible.Any violation of the FCPA or other applicable anti-bribery, anti-corruption laws, and anti-moneylaundering laws could result in whistleblower complaints, adverse media coverage, investigations, lossof export privileges, severe criminal or civil sanctions, or suspension or debarment from U.S.government contracts, all of which may have an adverse effect on our reputation, business, operatingresults and prospects.

If we were not able to satisfy data protection, security, privacy and other government-andindustry-specific requirements, our business, results of operations, and financial conditioncould be harmed.

Personal privacy has become a significant issue in the United States and in many other countrieswhere we offer our platform. The regulatory framework for privacy issues worldwide is rapidly evolvingand is likely to remain uncertain for the foreseeable future. Many federal, state and foreign governmentbodies and agencies have adopted or are considering adopting laws and regulations regarding thecollection, use and disclosure of personal information. In the United States, these include rules andregulations promulgated under the authority of the Federal Trade Commission, the Health InsurancePortability and Accountability Act (HIPAA) of 1996 and state breach notification laws. Internationally,many of the jurisdictions in which we operate have established their own data security and privacylegal framework with which we or our customers must comply, including the Data Protection Directiveestablished in the European Union.

In addition to government regulation, privacy advocates and industry groups may propose newand different self-regulatory standards that either legally or contractually apply to us. Because theinterpretation and application of privacy and data protection laws are still uncertain, it is possible thatthese laws may be interpreted and applied in a manner that is inconsistent with our existing datamanagement practices or the features of our software. If so, in addition to the possibility of fines,lawsuits and other claims, we could be required to fundamentally change our business activities andpractices or modify our software, which could have an adverse effect on our business. Any inability toadequately address privacy concerns, even if unfounded, or comply with applicable privacy or dataprotection laws, regulations and policies, could result in additional cost and liability to us, damage ourreputation, inhibit sales and adversely affect our business, results of operation, and financial condition.

Furthermore, the costs of compliance with, and other burdens imposed by, the laws, regulationsand policies that are applicable to the businesses of our customers may limit the use and adoption of,

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and reduce the overall demand for, our software. Privacy concerns, whether valid or not valid, mayinhibit market adoption of our platform particularly in certain industries and foreign countries.

The nature of our business requires the application of complex revenue and expenserecognition rules and the current legislative and regulatory environment affecting GAAP isuncertain. Significant changes in current principles could affect our consolidated financialstatements going forward and changes in financial accounting standards or practices maycause adverse, unexpected financial reporting fluctuations and harm our results of operations.

The accounting rules and regulations that we must comply with are complex and subject tointerpretation by the Financial Accounting Standards Board, or FASB, the Securities and ExchangeCommission, or SEC, and various bodies formed to promulgate and interpret appropriate accountingprinciples. In addition, many companies’ accounting disclosures are being subjected to heightenedscrutiny by regulators and the public. Further, the accounting rules and regulations are continuallychanging in ways that could impact our financial statements. For example, in May 2014, FASB issuednew accounting guidance on revenue recognition, Accounting Standards Update No. 2014-09,Revenue from Contracts with Customers (Topic 606), that becomes effective for us beginningJanuary 1, 2018. The standard permits the use of either a retrospective or cumulative effect transitionmethod.

We have not yet selected a transition method and continue to evaluate the impact that thisguidance will have on our financial condition and results of operations. Regardless of the transitionmethod, the application of this new guidance could have an adverse effect on our net income or loss.Changes to accounting principles or our accounting policies on our financial statements going forwardare difficult to predict and could have a significant effect on our reported financial results, and couldaffect the reporting of transactions completed before the announcement of the change. In addition,were we to change our critical accounting estimates, including the timing of recognition of licenserevenue and other revenue sources, our results of operations could be significantly impacted.

If we fail to maintain an effective system of disclosure controls and internal control overfinancial reporting, our ability to produce timely and accurate financial statements or complywith applicable regulations could be impaired.

As a public company, we will be subject to the reporting requirements of the Securities ExchangeAct of 1934, as amended, or the Exchange Act, the Sarbanes-Oxley Act, and the rules and regulationsof the applicable listing standards of the New York Stock Exchange. We expect that the requirementsof these rules and regulations will continue to increase our legal, accounting and financial compliancecosts, make some activities more difficult, time-consuming and costly, and place significant strain onour personnel, systems and resources.

The Sarbanes-Oxley Act requires, among other things, that we maintain effective disclosurecontrols and procedures and internal control over financial reporting. We are continuing to develop andrefine our disclosure controls and other procedures that are designed to ensure that informationrequired to be disclosed by us in the reports that we will file with the SEC is recorded, processed,summarized and reported within the time periods specified in SEC rules and forms and that informationrequired to be disclosed in reports under the Exchange Act is accumulated and communicated to ourprincipal executive and financial officers. We are also continuing to improve our internal control overfinancial reporting. In order to maintain and improve the effectiveness of our disclosure controls andprocedures and internal control over financial reporting, we have expended, and anticipate that we willcontinue to expend, significant resources, including accounting-related costs and significantmanagement oversight.

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Our current controls and any new controls that we develop may become inadequate because ofchanges in conditions in our business. Further, weaknesses in our disclosure controls and internalcontrol over financial reporting may be discovered in the future. Any failure to develop or maintaineffective controls or any difficulties encountered in their implementation or improvement could harm ourresults of operations or cause us to fail to meet our reporting obligations and may result in arestatement of our financial statements for prior periods. Any failure to implement and maintaineffective internal control over financial reporting also could adversely affect the results of periodicmanagement evaluations and annual independent registered public accounting firm attestation reportsregarding the effectiveness of our internal control over financial reporting that we will eventually berequired to include in our periodic reports that will be filed with the SEC. Ineffective disclosure controlsand procedures and internal control over financial reporting could also cause investors to loseconfidence in our reported financial and other information, which would likely have a negative effect onthe trading price of our Class A common stock. In addition, if we are unable to continue to meet theserequirements, we may not be able to remain listed on the New York Stock Exchange. We are notcurrently required to comply with the SEC rules that implement Section 404 of the Sarbanes-Oxley Actand are therefore not required to make a formal assessment of the effectiveness of our internal controlover financial reporting for that purpose. As a public company, we will be required to provide an annualmanagement report on the effectiveness of our internal control over financial reporting commencingwith our second annual report on Form 10-K.

Our independent registered public accounting firm is not required to formally attest to theeffectiveness of our internal control over financial reporting until after we are no longer an “emerginggrowth company” as defined in the JOBS Act. At such time, our independent registered publicaccounting firm may issue a report that is adverse in the event it is not satisfied with the level at whichour internal control over financial reporting is documented, designed or operating. Any failure tomaintain effective disclosure controls and internal control over financial reporting could have anadverse effect on our business and results of operations and could cause a decline in the price of ourClass A common stock.

Our business depends, in part, on sales to the public sector, and significant changes in thecontracting or fiscal policies of the public sector could have an adverse effect on our business.

We derive a portion of our revenue from sales of subscriptions to our platform and relatedservices to federal, state, local and foreign governments, and we believe that the success and growthof our business will continue to depend in part on our successful procurement of government contracts.Factors that could impede our ability to maintain or increase the amount of revenue derived fromgovernment contracts, include:

• changes in fiscal or contracting policies;

• decreases in available government funding;

• changes in government programs or applicable requirements;

• the adoption of new laws or regulations or changes to existing laws or regulations; and

• potential delays or changes in the government appropriations or other funding authorizationprocesses.

The occurrence of any of the foregoing could cause governments and governmental agencies todelay or refrain from purchasing subscriptions to our platform and related services in the future orotherwise have an adverse effect on our business, results of operations and financial condition.

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Certain of our results of operations and financial metrics may be difficult to predict as a resultof seasonality.

Although we have not historically experienced significant seasonality with respect to our revenuethroughout the year, we have seen seasonality in our sales cycle as a large percentage of ourcustomers make their purchases late in the fourth quarter of a given year and pay us in the first quarterof the subsequent year. We may be affected by seasonal trends in the future, particularly as ourbusiness matures. Such seasonality may result from a number of factors, including a slowdown in ourcustomers’ procurement process during certain times of the year, both domestically and internationally,and customers choosing to spend remaining budgets shortly before the end of their fiscal years. Theseeffects may become more pronounced as we target larger organizations, and their larger budgets forsales of our platform. Additionally, this seasonality may be reflected to a much lesser extent, andsometimes may not be immediately apparent, in our revenue, due to the fact that we recognizesubscription revenue over the term of the applicable subscription agreement. To the extent weexperience this seasonality, it may cause fluctuations in our results of operations and financial metrics,and make forecasting our future results of operations and financial metrics more difficult.

We may require additional capital to support our operations or the growth of our business, andwe cannot be certain that this capital will be available on reasonable terms when required, or atall.

We have funded our operations since inception primarily through equity financings and paymentsby our customers for use of our platform and services. We cannot be certain when or if our operationswill generate sufficient cash to fund our ongoing operations or the growth of our business.

In the future, we may require additional capital to support such activities or to respond to otherbusiness opportunities, challenges, acquisitions, or unforeseen circumstances. Our ability to obtainadditional financing, if and when required, will depend on investor and lender demand, our operatingperformance, the condition of the capital markets and other factors. We cannot be certain thatadditional financing will be available to us on favorable terms when required, or at all. If we raiseadditional funds through future issuances of equity or convertible debt securities, our existingstockholders could suffer significant dilution, and any new equity securities we issue could have rights,preferences and privileges superior to those of holders of our Class A common stock and Class Bcommon stock. Any debt financing that we may secure in the future could involve restrictive covenantsrelating to our capital raising activities and other financial and operational matters, which may make itmore difficult for us to obtain additional capital and to pursue business opportunities, including potentialacquisitions. If we were unable to obtain adequate financing or financing on terms satisfactory to uswhen we require it, our ability to continue to support our business growth and to respond to businesschallenges could be significantly impaired.

Taxing authorities may successfully assert that we should have collected or in the futureshould collect sales and use, value added or similar taxes, and we could be subject to liabilitywith respect to past or future sales, which could adversely affect our financial results.

We do not collect sales and use, value added and similar taxes in all jurisdictions in which wehave sales, based on our belief that such taxes are not applicable. Sales and use, value added andsimilar tax laws and rates vary greatly by jurisdiction. Certain jurisdictions in which we do not collectsuch taxes may assert that such taxes are applicable, which could result in tax assessments, penaltiesand interest, and we may be required to collect such taxes in the future. Such tax assessments,penalties and interest or future requirements may adversely affect our results of operations.Additionally, the application of federal, state, local and international tax laws to solutions provideddigitally are continuously evolving. Income, sales, use or other tax laws, statutes, rules, regulations or

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ordinances could be enacted or amended at any time, possibly with retroactive effect, which couldincrease our taxes and ultimately result in a negative impact on our results of operations and cashflows.

Our ability to use our net operating losses to offset future taxable income may be subject tocertain limitations.

As of December 31, 2016, we had net operating loss carryforwards, or NOLs, for Federal,California and other state income tax purposes of approximately $181.9 million, $56.9 million, and$59.0 million, respectively, which may be available to offset tax income in the future. In general, underSection 382 of the Internal Revenue Code of 1986, as amended, or the Code, a corporation thatundergoes an “ownership change” is subject to limitations on its ability to utilize its pre-change NOLs tooffset future taxable income. We have undergone ownership changes in the past, which has resulted insome limitations on our ability to utilize our NOLs, and if we undergo an ownership change inconnection with or after this offering, our ability to utilize NOLs could be further limited by Section 382of the Code. Future changes in our stock ownership, some of which are outside of our control, couldresult in an ownership change under Section 382 of the Code. Furthermore, our ability to utilize NOLsof companies that we have acquired or may acquire in the future may be subject to limitations. There isalso a risk that due to regulatory changes, such as suspensions on the use of NOLs or otherunforeseen reasons, our existing NOLs could expire or otherwise be unavailable to offset futureincome tax liabilities, including for state tax purposes. For these reasons, we may not be able to utilizea material portion of the NOLs reflected on our balance sheet, even if we attain profitability.

We may acquire or invest in companies, which may divert our management’s attention andresult in additional dilution to our stockholders. We may be unable to integrate acquiredbusinesses and technologies successfully or achieve the expected benefits of suchacquisitions.

Our success will depend, in part, on our ability to expand our platform and services and grow ourbusiness in response to changing technologies, customer demands and competitive pressures. Insome circumstances, we may choose to do so through the acquisition of complementary businessesand technologies rather than through internal development. The identification of suitable acquisitioncandidates can be difficult, time-consuming and costly, and we may not be able to successfullycomplete identified acquisitions. The risks we face in connection with acquisitions include:

• an acquisition may negatively affect our results of operations because it may require us to incurcharges or assume substantial debt or other liabilities, may cause adverse tax consequencesor unfavorable accounting treatment, may expose us to claims and disputes by stockholdersand third parties, including intellectual property claims and disputes, or may not generatesufficient financial return to offset additional costs and expenses related to the acquisition;

• we may encounter difficulties or unforeseen expenditures in integrating the business,technologies, products, personnel or operations of any company that we acquire, particularly ifkey personnel of the acquired company decide not to work for us;

• an acquisition may disrupt our ongoing business, divert resources, increase our expenses anddistract our management;

• an acquisition may result in a delay or reduction of customer purchases for both us and thecompany acquired due to customer uncertainty about continuity and effectiveness of servicefrom either company;

• we may encounter difficulties in, or may be unable to, successfully sell any acquired products;

• our use of cash to pay for acquisitions would limit other potential uses for our cash;

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• if we incur debt to fund any acquisitions, such debt may subject us to material restrictions onour ability to conduct our business financial maintenance covenants; and

• if we issue a significant amount of equity securities in connection with future acquisitions,existing stockholders may be diluted and earnings per share may decrease.

The occurrence of any of these risks could have an adverse effect on our business, results ofoperations and financial condition.

We depend and rely upon software-as-a-service, or SaaS, technologies from third parties tooperate our business, and interruptions or performance problems with these technologies mayadversely affect our business and results of operations.

We rely on hosted SaaS applications from third parties in order to operate critical functions of ourbusiness, including enterprise resource planning, order management, billing, cybersecurity, projectmanagement, and accounting and reporting all financial activity. If these services become unavailabledue to extended outages, interruptions or because they are no longer available on commerciallyreasonable terms, our expenses could increase, our ability to manage finances could be interruptedand our processes for managing sales of our platform and supporting our customers could be impaireduntil equivalent services, if available, are identified, obtained and implemented, all of which couldadversely affect our business.

We are an “emerging growth company,” and our election to comply with the reduced disclosurerequirements as a public company may make our Class A common stock less attractive toinvestors.

For so long as we remain an “emerging growth company,” as defined in the JOBS Act, we maytake advantage of certain exemptions from various requirements that are applicable to publiccompanies that are not “emerging growth companies,” including not being required to comply with theindependent auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act, reduceddisclosure obligations regarding executive compensation in our periodic reports and proxy statements,and exemptions from the requirements of holding a non-binding advisory vote on executivecompensation and stockholder approval of any golden parachute payments not previously approved.We will remain an “emerging growth company” until the earliest of (i) the last day of the fiscal yearfollowing the fifth anniversary of the completion of this offering, (ii) the last day of the first fiscal year inwhich our annual gross revenue is $1 billion or more, (iii) the date on which we have, during theprevious rolling three-year period, issued more than $1 billion in non-convertible debt securities or(iv) the date on which we are deemed to be a “large accelerated filer” as defined in the Exchange Act.We cannot predict if investors will find our Class A common stock less attractive because we may relyon these exemptions. If some investors find our Class A common stock less attractive as a result, theremay be a less active trading market for our Class A common stock, and our stock price may be morevolatile and may decline.

In addition, the JOBS Act also provides that an “emerging growth company” can take advantageof an extended transition period for complying with new or revised accounting standards. However, wehave chosen to “opt out” of such extended transition period, and as a result, we will comply with new orrevised accounting standards on the relevant dates on which adoption of such standards is required fornon-emerging growth companies. Our decision to opt out of the extended transition period forcomplying with new or revised accounting standards is irrevocable.

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Our business is subject to the risks of earthquakes, fire, floods and other natural catastrophicevents, and to interruption by man-made problems such as power disruptions, computerviruses, data security breaches or terrorism.

Our corporate headquarters are located in the San Francisco Bay Area, a region known forseismic activity. A significant natural disaster, such as an earthquake, fire or a flood, occurring at ourheadquarters, at one of our other facilities or where a business partner is located could adversely affectour business, results of operations and financial condition. Further, if a natural disaster or man-madeproblem were to affect datacenters used by AWS, this could adversely affect the ability of ourcustomers to use our platform. In addition, natural disasters and acts of terrorism could causedisruptions in our or our customers’ businesses, national economies or the world economy as a whole.We also rely on our network and third-party infrastructure and enterprise applications and internaltechnology systems for our engineering, sales and marketing and operations activities. Although wemaintain incident management and disaster response plans, in the event of a major disruption causedby a natural disaster or man-made problem, we may be unable to continue our operations and mayendure system interruptions, reputational harm, delays in our development activities, lengthyinterruptions in service, breaches of data security and loss of critical data, any of which could adverselyaffect our business, results of operations and financial condition.

In addition, computer malware, viruses and computer hacking, fraudulent use attempts andphishing attacks have become more prevalent in our industry, have occurred on our platform in thepast and may occur on our platform in the future. Though it is difficult to determine what, if any, harmmay directly result from any specific interruption or attack, any failure to maintain performance,reliability, security and availability of our platform and technical infrastructure to the satisfaction of ourusers may harm our reputation and our ability to retain existing customers and attract new customers.

Risks Related to this Offering and Ownership of Our Class A Common Stock

The dual class structure of our common stock has the effect of concentrating voting controlwith those stockholders who held our capital stock prior to the completion of this offering,including our executive officers, employees and directors and their affiliates, which will limityour ability to influence the outcome of important transactions, including a change in control.

Our Class B common stock has 10 votes per share, and our Class A common stock, which is thestock we are offering in this offering, has one vote per share. All shares of our capital stock outstandingimmediately prior to this offering, including all shares held by our executive officers, employees anddirectors, and their respective affiliates, will be reclassified into shares of our Class B common stockimmediately prior to the completion of this offering. Upon the completion of this offering, outstandingshares of Class B common stock will represent approximately 98.9% of the voting power of ouroutstanding capital stock, and outstanding shares of Class B common stock held by our directors,executive officers, and each of our stockholders who owns greater than five percent of our outstandingcapital stock, will represent approximately 74.6% of the voting power of our outstanding capital stock.Because of the 10-to-1 voting ratio between our Class B common stock and Class A common stock,after the completion of this offering, the holders of our Class B common stock will collectively continueto control a majority of the combined voting power of our capital stock and therefore be able to controlall matters submitted to our stockholders for approval even when the shares of Class B common stockrepresent a small minority of all outstanding shares of our Class A common stock and Class Bcommon stock. These holders of our Class B common stock may also have interests that differ fromyours and may vote in a way with which you disagree and which may be adverse to your interests. Thisconcentrated control may have the effect of delaying, preventing or deterring a change in control of ourcompany, could deprive our stockholders of an opportunity to receive a premium for their capital stockas part of a sale of our company and might ultimately affect the market price of our Class A commonstock.

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Future transfers by holders of our Class B common stock will generally result in those sharesconverting into shares of our Class A common stock, subject to limited exceptions, such as certaintransfers effected for tax or estate planning purposes. The conversion of shares of our Class Bcommon stock into shares of our Class A common stock will have the effect, over time, of increasingthe relative voting power of those holders of Class B common stock who retain their shares in the longterm. If, for example, Messrs. Schott and Mason retain a significant portion of their holdings of ourClass B common stock for an extended period of time, they could control a significant portion of thevoting power of our capital stock for the foreseeable future. As a board member, Mr. Schott owes afiduciary duty to our stockholders and must act in good faith and in a manner he reasonably believes tobe in the best interests of our stockholders. As stockholders, Messrs. Schott and Mason are entitled tovote their shares in their own interests, which may not always be in the interests of our stockholdersgenerally. For a description of the dual class structure, see the section titled “Description of CapitalStock.”

There has been no prior public trading market for our Class A common stock, and an activetrading market may not develop or be sustained following this offering.

We have applied for the listing of our Class A common stock on the New York Stock Exchangeunder the symbol “MULE.” However, there has been no prior public trading market for our Class Acommon stock. We cannot assure you that an active trading market for our Class A common stock willdevelop on such exchange or elsewhere or, if developed, that any market will be sustained.Accordingly, we cannot assure you of the liquidity of any trading market, your ability to sell your sharesof our Class A common stock when desired or the prices that you may obtain for your shares of ourClass A common stock.

The trading price of our Class A common stock could be volatile, which could cause the valueof your investment to decline.

Technology stocks have historically experienced high levels of volatility. The trading price of ourClass A common stock following this offering may fluctuate substantially. Following the completion ofthis offering, the market price of our Class A common stock may be higher or lower than the price youpay in the offering, depending on many factors, some of which are beyond our control and may not berelated to our operating performance. These fluctuations could cause you to lose all or part of yourinvestment in our Class A common stock. Factors that could cause fluctuations in the trading price ofour Class A common stock include the following:

• announcements of new products or technologies, commercial relationships, acquisitions orother events by us or our competitors;

• changes in how customers perceive the benefits of our platform;

• departures of key personnel;

• price and volume fluctuations in the overall stock market from time to time;

• fluctuations in the trading volume of our shares or the size of our public float;

• sales of large blocks of our Class A common stock;

• actual or anticipated changes or fluctuations in our results of operations;

• whether our results of operations meet the expectations of securities analysts or investors;

• changes in actual or future expectations of investors or securities analysts;

• litigation involving us, our industry, or both;

• regulatory developments in the United States, foreign countries or both;

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• general economic conditions and trends;

• major catastrophic events in our domestic and foreign markets; and

• “flash crashes,” “freeze flashes” or other glitches that disrupt trading on the securities exchangeon which we are listed.

In addition, if the market for technology stocks or the stock market in general experiences a lossof investor confidence, the trading price of our Class A common stock could decline for reasonsunrelated to our business, results of operations or financial condition. The trading price of our Class Acommon stock might also decline in reaction to events that affect other companies in our industry evenif these events do not directly affect us. In the past, following periods of volatility in the trading price ofa company’s securities, securities class action litigation has often been brought against that company.If our stock price is volatile, we may become the target of securities litigation. Securities litigation couldresult in substantial costs and divert our management’s attention and resources from our business.This could have an adverse effect on our business, results of operations and financial condition.

If securities analysts or industry analysts were to downgrade our stock, publish negativeresearch or reports or fail to publish reports about our business, our competitive position couldsuffer, and our stock price and trading volume could decline.

The trading market for our Class A common stock will, to some extent, depend on the researchand reports that securities or industry analysts publish about us or our business. We do not have anycontrol over these analysts. If one or more of the analysts who cover us should downgrade our stock orpublish negative research or reports, cease coverage of our company or fail to regularly publish reportsabout our business, our competitive position could suffer, and our stock price and trading volume coulddecline.

Purchasers in this offering will immediately experience substantial dilution in net tangible bookvalue.

The initial public offering price of our Class A common stock is substantially higher than the proforma net tangible book value per share of our common stock immediately following this offering basedon the total value of our tangible assets less our total liabilities. Therefore, if you purchase shares ofour Class A common stock in this offering, you will experience immediate dilution of $11.50 per share,the difference between the price per share you pay for our Class A common stock and the pro formanet tangible book value per share as of December 31, 2016, after giving effect to the issuance ofshares of our Class A common stock in this offering. See the section titled “Dilution” below.

Sales of substantial amounts of our Class A common stock in the public markets, or theperception that such sales could occur, could reduce the price that our Class A common stockmight otherwise attain.

Sales of a substantial number of shares of our Class A common stock in the public market afterthis offering, or the perception that such sales could occur, could adversely affect the market price ofour Class A common stock and may make it more difficult for you to sell your Class A common stock ata time and price that you deem appropriate. Based on the total number of outstanding shares of ourcapital stock as of December 31, 2016, upon completion of this offering, we will have approximately125,991,577 shares of capital stock outstanding. All of the shares of Class A common stock sold in thisoffering will be freely tradable without restrictions or further registration under the Securities Act of1933, as amended, or the Securities Act, except for any shares held by our “affiliates” as defined inRule 144 under the Securities Act.

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Subject to certain exceptions described in the section titled “Underwriting,” we, our executiveofficers, directors and holders of a substantially majority of our common stock and securitiesconvertible into or exchangeable for shares of our common stock have entered into or will enter intolock-up agreements with the underwriters of this offering under which we and they have agreed or willagree that, subject to certain exceptions, without the prior written consent of Goldman, Sachs & Co.and J.P. Morgan Securities LLC, we and they will not dispose of or hedge any shares or any securitiesconvertible into or exchangeable for shares of our common stock for a period of 180 days after thedate of this prospectus. In addition, our executive officers, directors and holders of all of our commonstock and securities convertible into or exchangeable for shares of our common stock have enteredinto market standoff agreements with us under which they have agreed that, subject to certainexceptions, without our consent, they will not dispose of or hedge any shares or any securitiesconvertible into or exchangeable for shares of our common stock for a period of 180 days after thedate of this prospectus. We will agree that, without the prior written consent of Goldman, Sachs & Co.and J.P. Morgan Securities LLC, we will not release any of the securities subject to these marketstandoff agreements. When the lock-up period in the lock-up agreements and market standoffagreements expires, we and our locked-up security holders will be able to sell our shares in the publicmarket. In addition, Goldman, Sachs & Co. and J.P. Morgan Securities LLC, on behalf of theunderwriters, may release all or some portion of the shares subject to the lock-up agreements ormarket standoff agreements prior to the expiration of the lock-up period. See the section titled “SharesEligible for Future Sale” for more information. Sales of a substantial number of such shares uponexpiration of, or the perception that such sales may occur, or early release of the securities subject to,the lock-up agreements or market standoff agreements, could cause our stock price to fall or make itmore difficult for you to sell your Class A common stock at a time and price that you deem appropriate.

Based on shares outstanding as of December 31, 2016, holders of up to approximately86,767,415 shares (including 19,640 shares of our Class B common stock issuable upon the exerciseof a warrant that was outstanding as of December 31, 2016), or 68.9% of our capital stock after thecompletion of this offering, will have rights, subject to certain conditions, to require us to file registrationstatements covering the sale of their shares or to include their shares in registration statements that wemay file for ourselves or other stockholders. We also intend to register the offer and sale of all sharesof capital stock that we may issue under our equity compensation plans.

Our issuance of additional capital stock in connection with financings, acquisitions,investments, our stock incentive plans or otherwise will dilute all other stockholders.

We expect to issue additional capital stock in the future that will result in dilution to all otherstockholders. We expect to grant equity awards to employees, directors and consultants under ourstock incentive plans. We may also raise capital through equity financings in the future. As part of ourbusiness strategy, we may acquire or make investments in complementary companies, products ortechnologies and issue equity securities to pay for any such acquisition or investment. Any suchissuances of additional capital stock may cause stockholders to experience significant dilution of theirownership interests and the per share value of our Class A common stock to decline.

Management will have broad discretion over the use of proceeds from this offering.

The principal purposes of this offering are to increase our capitalization and financial flexibility,create a public market for our stock and thereby enable access to the public equity markets by ouremployees and stockholders, obtain additional capital and increase our visibility in the marketplace. Asof the date of this prospectus, we have no specific plans for the use of the net proceeds we receivefrom this offering. However, we currently intend to use the net proceeds we receive from this offeringprimarily for general corporate purposes, including headcount expansion and operating infrastructuredevelopment, research and development activities, sales and marketing activities, general and

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administrative activities, working capital and capital expenditures. Accordingly, our management willhave broad discretion over the specific use of the net proceeds that we receive in this offering andmight not be able to obtain a significant return, if any, on investment of these net proceeds. Investors inthis offering will need to rely upon the judgment of our management with respect to the use ofproceeds. If we do not use the net proceeds that we receive in this offering effectively, our business,results of operations and financial condition could be harmed.

We do not intend to pay dividends on our Class A common stock and, consequently, yourability to achieve a return on your investment will depend on appreciation in the price of ourClass A common stock.

We have never declared or paid any dividends on our capital stock. We intend to retain anyearnings to finance the operation and expansion of our business, and we do not anticipate paying anycash dividends in the foreseeable future. As a result, you may only receive a return on your investmentin our Class A common stock if the market price of our Class A common stock increases.

Delaware law and our corporate charter and bylaws will contain anti-takeover provisions thatcould delay or discourage takeover attempts that stockholders may consider favorable.

Our amended and restated certificate of incorporation and amended and restated bylaws that willbe in effect upon completion of this offering contain provisions that could delay or prevent a change incontrol of our company. These provisions could also make it difficult for stockholders to elect directorswho are not nominated by the current members of our board of directors or take other corporateactions, including effecting changes in our management. These provisions include:

• a classified board of directors with three-year staggered terms, which could delay the ability ofstockholders to change the membership of a majority of our board of directors;

• the ability of our board of directors to issue shares of preferred stock and to determine the priceand other terms of those shares, including preferences and voting rights, without stockholderapproval, which could be used to significantly dilute the ownership of a hostile acquirer;

• the exclusive right of our board of directors to elect a director to fill a vacancy created by theexpansion of our board of directors or the resignation, death or removal of a director, whichprevents stockholders from being able to fill vacancies on our board of directors;

• a prohibition on stockholder action by written consent, which forces stockholder action to betaken at an annual or special meeting of our stockholders;

• the requirement that a special meeting of stockholders may be called only by our board ofdirectors, the chairperson of our board of directors, our chief executive officer or our president(in the absence of a chief executive officer), which could delay the ability of our stockholders toforce consideration of a proposal or to take action, including the removal of directors;

• the requirement for the affirmative vote of holders of at least 66 2/3% of the voting power of allof the then outstanding shares of the voting stock, voting together as a single class, to amendthe provisions of our amended and restated certificate of incorporation relating to themanagement of our business (including our classified board structure) or certain provisions ofour amended and restated bylaws, which may inhibit the ability of an acquirer to effect suchamendments to facilitate an unsolicited takeover attempt;

• the ability of our board of directors to amend the bylaws, which may allow our board of directorsto take additional actions to prevent an unsolicited takeover and inhibit the ability of an acquirerto amend the bylaws to facilitate an unsolicited takeover attempt;

• advance notice procedures with which stockholders must comply to nominate candidates to ourboard of directors or to propose matters to be acted upon at a stockholders’ meeting, which

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may discourage or deter a potential acquirer from conducting a solicitation of proxies to electthe acquirer’s own slate of directors or otherwise attempting to obtain control of us; and

• the authorization of two classes of common stock, as discussed above.

In addition, as a Delaware corporation, we are subject to Section 203 of the Delaware GeneralCorporation Law, which may prohibit large stockholders, in particular those owning 15% or more of ouroutstanding voting stock, from merging or combining with us for a specified period of time.

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SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

This prospectus contains forward-looking statements within the meaning of the federal securitieslaws, which statements involve substantial risks and uncertainties. Forward-looking statementsgenerally relate to future events or our future financial or operating performance. In some cases, youcan identify forward-looking statements because they contain words such as “may,” “will,” “should,”“expects,” “plans,” “anticipates,” “could,” “intends,” “target,” “projects,” “contemplates,” “believes,”“estimates,” “predicts,” “potential” or “continue” or the negative of these words or other similar terms orexpressions that concern our expectations, strategy, plans or intentions. Forward-looking statementscontained in this prospectus include, but are not limited to, statements about:

• our ability to attract and retain customers, including larger organizations;

• our ability to deepen our relationships with existing customers;

• our expectations regarding our customer growth rate;

• our business plan and beliefs and objectives for future operations;

• trends associated with our industry and potential market, including the adoption of applicationnetworks;

• benefits associated with use of our platform and services;

• our ability to develop or acquire new products and services, improve our platform and servicesand increase the value of our platform and services, including through the principle ofdeclarative modularity;

• our ability to compete successfully against current and future competitors;

• the network effects associated with our business;

• our ability to further develop strategic relationships;

• our ability to achieve positive returns on investments;

• our plans to further invest in and grow our business, and our ability to effectively manage ourgrowth and associated investments;

• our ability to timely and effectively scale and adapt our existing technology;

• our ability to increase our revenue, our revenue growth rate and gross margin;

• our future financial performance, including trends in revenue, cost of revenue, operatingexpenses, other income and expenses, income taxes, billings, customers, and dollar-based netretention rate;

• the sufficiency of our cash and cash equivalents and cash generated from operations to meetour working capital and capital expenditure requirements;

• our ability to attract, train, and retain qualified employees and key personnel;

• our ability to maintain and benefit from our corporate culture;

• our ability to successfully identify, acquire and integrate companies and assets;

• our ability to successfully enter new markets and manage our international expansion;

• our ability to maintain, protect and enhance our intellectual property and not infringe uponothers’ intellectual property; and

• our anticipated uses of the net proceeds from this offering.

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We caution you that the foregoing list may not contain all of the forward-looking statements madein this prospectus.

You should not rely upon forward-looking statements as predictions of future events. We havebased the forward-looking statements contained in this prospectus primarily on our currentexpectations and projections about future events and trends that we believe may affect our business,financial condition, results of operations and prospects. The outcome of the events described in theseforward-looking statements is subject to risks, uncertainties and other factors described in the sectiontitled “Risk Factors” and elsewhere in this prospectus. Moreover, we operate in a very competitive andrapidly changing environment. New risks and uncertainties emerge from time to time and it is notpossible for us to predict all risks and uncertainties that could have an impact on the forward-lookingstatements contained in this prospectus. We cannot assure you that the results, events andcircumstances reflected in the forward-looking statements will be achieved or occur, and actual results,events or circumstances could differ materially from those described in the forward-looking statements.

The forward-looking statements made in this prospectus relate only to events as of the date onwhich the statements are made. We undertake no obligation to update any forward-looking statementsmade in this prospectus to reflect events or circumstances after the date of this prospectus or to reflectnew information or the occurrence of unanticipated events, except as required by law. We may notactually achieve the plans, intentions or expectations disclosed in our forward-looking statements andyou should not place undue reliance on our forward-looking statements. Our forward-lookingstatements do not reflect the potential impact of any future acquisitions, mergers, dispositions, jointventures or investments we may make.

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MARKET AND INDUSTRY DATA

This prospectus contains estimates and information concerning our industry, including marketsize and growth rates of the markets in which we participate, that are based on industry publicationsand reports. This information involves a number of assumptions and limitations, and you are cautionednot to give undue weight to these estimates. We have not independently verified the accuracy orcompleteness of the data contained in these industry publications and reports. The industry in whichwe operate is subject to a high degree of uncertainty and risk due to variety of factors, including thosedescribed in the section titled “Risk Factors.” These and other factors could cause results to differmaterially from those expressed in these publications and reports.

Certain information in the text of this prospectus is contained in independent industrypublications. The source of these independent industry publications is provided below:

• S&P CapIQ database accessed on February 15, 2017.

• Forrester Research, Inc., The Global Tech Market Outlook For 2017 To 2018, January 9, 2017.

• Gartner, Inc., Forecast: Internet of Things – Endpoints and Associated Services, Worldwide,2015, October 29, 2015.

• EMC Digital Universe Study, with data and analysis by International Data Corporation, TheDigital Universe of Opportunities, April 2014.

The Gartner Report described herein, or the Gartner Report, represents research opinion orviewpoints published, as part of a syndicated subscription service, by Gartner, Inc., or Gartner, and arenot representations of fact. The Gartner Report speaks as of its original publication date (and not as ofthe date of this prospectus) and the opinions expressed in the Gartner Report are subject to changewithout notice.

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USE OF PROCEEDS

We estimate that the net proceeds to us from the sale of shares of our Class A common stockoffered by us in this offering at the assumed initial public offering price of $13.00 per share, which isthe midpoint of the estimated offering price range set forth on the cover page of this prospectus, andafter deducting estimated underwriting discounts and commissions and estimated offering expensespayable by us, will be approximately $153.5 million, or approximately $177.0 million if the underwriters’option to purchase additional shares of our Class A common stock from us is exercised in full.

Each $1.00 increase or decrease in the assumed initial public offering price of $13.00 per share,which is the midpoint of the estimated offering price range set forth on the cover page of thisprospectus, would increase or decrease, as applicable, the net proceeds to us from this offering byapproximately $12.1 million, assuming the number of shares of our Class A common stock offered byus, as set forth on the cover page of this prospectus, remains the same and after deducting theestimated underwriting discounts and commissions payable by us. Similarly, each 1,000,000 increaseor decrease in the number of shares of our Class A common stock offered by us would increase ordecrease, as applicable, the net proceeds to us from this offering by approximately $12.1 million,assuming the assumed initial public offering price of $13.00 per share, which is the midpoint of theestimated offering price range set forth on the cover page of this prospectus, remains the same andafter deducting the estimated underwriting discounts and commissions.

The principal purposes of this offering are to increase our capitalization and financial flexibility,create a public market for our Class A common stock and enable access to the public equity marketsfor us and our stockholders.

We intend to use the net proceeds to us from this offering for general corporate purposes,including working capital, operating expenses and capital expenditures. We may also use a portion ofthe net proceeds to acquire complementary businesses, products, services or technologies. However,we do not have agreements or commitments for any material acquisitions at this time.

We cannot specify with certainty the particular uses of the net proceeds to us from this offering.Accordingly, we will have broad discretion in using these proceeds. Pending the use of proceeds to usfrom this offering as described above, we intend to invest the net proceeds to us from this offering inshort-term and long-term interest-bearing obligations, including government and investment-grade debtsecurities and money market funds.

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DIVIDEND POLICY

We have never declared or paid any cash dividends on our capital stock. We currently intend toretain all available funds and any future earnings for use in the operation of our business and do notexpect to pay any dividends on our capital stock in the foreseeable future. Any future determination todeclare dividends will be made at the discretion of our board of directors, subject to applicable laws,and will depend on a number of factors, including our financial condition, results of operations, capitalrequirements, contractual restrictions, general business conditions and other factors that our board ofdirectors may deem relevant.

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CAPITALIZATION

The following table sets forth our cash, cash equivalents, and investments and capitalization as ofDecember 31, 2016 as follows:

• on an actual basis;

• on a pro forma basis, giving effect to (i) the automatic conversion and reclassification of alloutstanding shares of our convertible preferred stock into an aggregate of 86,030,961 shares ofour Class B common stock, and (ii) the filing and effectiveness of our amended and restatedcertificate of incorporation in Delaware, as if such conversion, reclassification, filing andeffectiveness had occurred on December 31, 2016; and

• on a pro forma as adjusted basis, giving effect to the pro forma adjustments set forth aboveand the sale and issuance by us of 13,000,000 shares of our Class A common stock in thisoffering, based upon the assumed initial public offering price of $13.00 per share, which is themidpoint of the estimated offering price range set forth on the cover page of this prospectus,and after deducting estimated underwriting discounts and commissions and estimated offeringexpenses payable by us.

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You should read this table together with our consolidated financial statements and related notes,and the sections titled “Selected Consolidated Financial and Other Data” and “Management’sDiscussion and Analysis of Financial Condition and Results of Operations” that are included elsewherein this prospectus.


Actual Pro FormaPro Forma

as Adjusted(1)

(In thousands, except share and per sharedata)

Cash, cash equivalents, and investments . . . . . . . . . . . . . . . . . . . $ 102,613 $ 102,613 $ 257,813(2)

Stockholders’ equity:Convertible preferred stock, $0.000025 par value per share—

90,296,190 shares authorized, 86,030,961 shares issued andoutstanding, actual; no shares authorized, issued andoutstanding, pro forma and pro forma as adjusted . . . . . . . . . . $ 255,946 $ — $ —

Preferred stock, $0.000025 par value per share—no sharesauthorized, issued and outstanding, actual; 100,000,000shares authorized, no shares issued and outstanding, proforma and pro forma as adjusted . . . . . . . . . . . . . . . . . . . . . . . . — — —

Common stock, $0.000025 par value per share—144,000,000shares authorized, 26,960,616 shares issued andoutstanding, actual; no shares authorized, issued andoutstanding, pro forma and pro forma as adjusted . . . . . . . . . . 1 — —

Class A common stock, $0.000025 par value per share—noshares authorized, issued and outstanding, actual;1,000,000,000 shares authorized, no shares issued andoutstanding, pro forma; 1,000,000,000 shares authorized,13,000,000 shares issued and outstanding, pro forma asadjusted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — — —

Class B common stock, $0.000025 par value per share—noshares authorized, issued and outstanding, actual;200,000,000 shares authorized, 112,991,577 shares issuedand outstanding, pro forma and pro forma as adjusted . . . . . . — 3 3

Additional paid-in capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22,241 278,185 431,655Accumulated deficit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (236,230) (236,230) (236,230)Accumulated other comprehensive loss . . . . . . . . . . . . . . . . . . . . (1,855) (1,855) (1,855)

Total stockholders’ equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40,103 40,103 193,573

Total capitalization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 40,103 $ 40,103 $ 193,573

(1) Each $1.00 increase (decrease) in the assumed initial public offering price of $13.00 per share, which is the midpoint ofthe estimated offering price range set forth on the cover page of this prospectus, would increase (decrease) our cash,cash equivalents, and investments, total stockholders’ equity, and total capitalization by approximately $12.1 million,assuming that the number of shares of our Class A common stock offered by us, as set forth on the cover page of thisprospectus, remains the same and after deducting estimated underwriting discounts and commissions. Each increase(decrease) of 1,000,000 shares in the number of shares offered by us would increase (decrease) the amount of our cash,cash equivalents, and investments, total stockholders’ equity and total capitalization by approximately $12.1 million,assuming an initial public offering price of $13.00 per share, which is the midpoint of the estimated offering price range setforth on the cover page of this prospectus, after deducting estimated underwriting discounts and commissions.

(2) Pro forma as adjusted cash, cash equivalents, and investments reflects $1.7 million of deferred offering costs that hadbeen paid as of December 31, 2016.

If the underwriters’ option to purchase additional shares of our Class A common stock from uswere exercised in full, pro forma as adjusted cash, cash equivalents, and investments, total

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stockholders’ equity, and total capitalization and shares outstanding as of December 31, 2016 wouldbe $281.4 million, $217.1 million, $217.1 million, and 127,941,577 shares, respectively.

The pro forma and pro forma as adjusted columns in the table above are based on no shares ofour Class A common stock and 112,991,577 shares of our Class B common stock (including shares ofour convertible preferred stock on an as-converted basis) outstanding as of December 31, 2016, andexclude the following:



• 42,312 shares of our Class B common stock issuable upon the vesting of RSUs granted afterDecember 31, 2016;



• 15,200,000 shares of our Class A common stock reserved for future issuance under our2017 Plan, which will become effective prior to the completion of this offering;

• 3,183,229 shares of our Class A common stock that will be added to the shares of ourClass A common stock reserved under our 2017 Plan upon its effectiveness, which sharesare currently reserved for future issuance under our 2016 Plan (after giving effect to the grantof 575,058 shares of our common stock issuable upon the exercise of options to purchaseshares of our common stock and the vesting of RSUs granted after December 31, 2016), atwhich time we will cease granting awards under our 2016 Plan; and

• 2,540,000 shares of our Class A common stock reserved for future issuance under ourESPP, which will become effective prior to the completion of this offering.

Our 2017 Plan and our ESPP each provide for annual automatic increases in the number ofshares of Class A common stock reserved thereunder, and our 2017 Plan also provides for increasesin the number of shares of Class A common stock reserved thereunder based on awards under our2016 Plan and 2006 Plan that expire, are forfeited or otherwise repurchased by us. See the sectiontitled “Executive Compensation—Employee Benefit and Stock Plans” for additional information.

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DILUTION

If you purchase shares of our Class A common stock in this offering, your ownership interest willbe diluted to the extent of the difference between the initial public offering price per share of ourClass A common stock in this offering and the pro forma as adjusted net tangible book value per shareimmediately after this offering. Dilution in pro forma net tangible book value per share to investorspurchasing shares of our Class A common stock in this offering represents the difference between theamount per share paid by investors purchasing shares of our Class A common stock in this offeringand the pro forma as adjusted net tangible book value per share of our common stock immediatelyafter completion of this offering.

Net tangible book value per share is determined by dividing our total tangible assets less our totalliabilities by the number of shares of our common stock outstanding. Our historical net tangible bookvalue as of December 31, 2016 was $35.5 million, or $1.32 per share. Our pro forma net tangible bookvalue as of December 31, 2016 was $35.5 million, or $0.31 per share, based on the total number ofshares of our Class A common stock and Class B common stock outstanding as of December 31,2016, after giving effect to the automatic conversion and reclassification of all outstanding shares ofour convertible preferred stock as of December 31, 2016 into an aggregate of 86,030,961 shares of ourClass B common stock, which conversion and reclassification will occur immediately prior to thecompletion of this offering.

After giving effect to the sale by us of 13,000,000 shares of our Class A common stock in thisoffering at the assumed initial public offering price of $13.00 per share, which is the midpoint of theestimated offering price range set forth on the cover page of this prospectus, and after deductingestimated underwriting discounts and commissions and estimated offering expenses payable by us,our pro forma as adjusted net tangible book value as of December 31, 2016 would have been$189.0 million, or $1.50 per share. This represents an immediate increase in pro forma net tangiblebook value of $1.19 per share to our existing stockholders and an immediate dilution in pro forma nettangible book value of $11.50 per share to investors purchasing shares of our Class A common stockin this offering. The following table illustrates this dilution:

Assumed initial public offering price per share . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $13.00Pro forma net tangible book value per share as of December 31, 2016 . . . . . . . . . $0.31Increase in pro forma net tangible book value per share attributable to investors

purchasing shares of our Class A common stock in this offering . . . . . . . . . . . . . 1.19

Pro forma as adjusted net tangible book value per share immediately after thecompletion of this offering . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.50

Dilution in pro forma net tangible book value per share to investors purchasing sharesin this offering . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $11.50

Each $1.00 increase or decrease in the assumed initial public offering price of $13.00 per share,which is the midpoint of the estimated offering price range set forth on the cover page of thisprospectus, would increase or decrease, as applicable, our pro forma as adjusted net tangible bookvalue per share to new investors by $0.10, and would increase or decrease, as applicable, dilution pershare to investors purchasing shares of our Class A common stock in this offering by $0.90, assumingthe number of shares of our Class A common stock offered by us, as set forth on the cover page of thisprospectus, remains the same and after deducting estimated underwriting discounts and commissions.Similarly, each 1,000,000 increase or decrease in the number of shares of our Class A common stockoffered by us would increase or decrease, as applicable, our pro forma as adjusted net tangible bookvalue by approximately $0.08 per share and increase or decrease, as applicable, the dilution toinvestors purchasing shares of our Class A common stock in this offering by $0.08 per share,assuming

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the assumed initial public offering price of $13.00 per share, which is the midpoint of the estimatedoffering price range set forth on the cover page of this prospectus, remains the same and afterdeducting the estimated underwriting discounts and commissions.

If the underwriters’ option to purchase additional shares of our Class A common stock from us isexercised in full, the pro forma as adjusted net tangible book value per share of our Class A commonstock immediately after the completion of this offering would be $1.66 per share, and the dilution in proforma net tangible book value per share to investors purchasing shares of our Class A common stockin this offering would be $11.34 per share.

The following table presents, as of December 31, 2016, after giving effect to (i) the automaticconversion and reclassification of all outstanding shares of our convertible preferred stock into anaggregate of 86,030,961 shares of our Class B common stock, which conversion and reclassificationwill occur immediately prior to the completion of this offering, and (ii) the sale by us of13,000,000 shares of our Class A common stock in this offering at the assumed initial public offeringprice of $13.00 per share, which is the midpoint of the estimated offering price range set forth on thecover page of this prospectus, the difference between the existing stockholders and the investorspurchasing shares of our Class A common stock in this offering with respect to the number of shares ofour Class A common stock purchased from us, the total consideration paid or to be paid to us, and theaverage price per share paid or to be paid to us, before deducting estimated underwriting discountsand commissions and estimated offering expenses payable by us:

Shares Purchased Total Consideration AveragePrice Per

ShareNumber Percent Amount Percent

Existing stockholders . . . . . . . . . . . . . . . . . . . 112,991,577 89.7% $266,089,000 61.2% $ 2.35Investors purchasing shares of our Class A

common stock in this offering . . . . . . . . . . 13,000,000 10.3 169,000,000 38.8 13.00

Totals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 125,991,577 100% $435,089,000 100%

Each $1.00 increase or decrease in the assumed initial public offering price of $13.00 per share,which is the midpoint of the estimated offering price range set forth on the cover page of thisprospectus, would increase or decrease, as applicable, the total consideration paid by investorspurchasing shares in this offering and total consideration paid by all stockholders by approximately$12.1 million, assuming the number of shares of our Class A common stock offered by us, as set forthon the cover page of this prospectus, remains the same and after deducting estimated underwritingdiscounts and commissions and estimated offering expenses payable by us.

Except as otherwise indicated, the above discussion and tables assume no exercise of theunderwriters’ option to purchase additional shares of our Class A common stock from us. If theunderwriters’ option to purchase additional shares of our Class A common stock were exercised in full,our existing stockholders would own 88.3% and the investors purchasing shares of our Class Acommon stock in this offering would own 11.7% of the total number of shares of our capital stockoutstanding immediately after completion of this offering.

The number of shares of our Class A common stock and Class B common stock that will beoutstanding after this offering is based on no shares of our Class A common stock and 112,991,577shares of our Class B common stock (including shares of our convertible preferred stock on an as-converted basis) outstanding as of as of December 31, 2016, and excludes:


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• 42,312 shares of our Class B common stock issuable upon the vesting of RSUs granted afterDecember 31, 2016;



• 15,200,000 shares of our Class A common stock reserved for future issuance under our2017 Plan, which will become effective prior to the completion of this offering;

• 3,183,229 shares of our Class A common stock that will be added to the shares of ourClass A common stock reserved under our 2017 Plan upon its effectiveness, which sharesare currently reserved for future issuance under our 2016 Plan (after giving effect to the grantof 575,058 shares of our common stock issuable upon the exercise of options to purchaseshares of our common stock and the vesting of RSUs granted after December 31, 2016), atwhich time we will cease granting awards under our 2016 Plan; and

• 2,540,000 shares of our Class A common stock reserved for future issuance under ourESPP, which will become effective prior to the completion of this offering.

Our 2017 Plan and our ESPP each provide for annual automatic increases in the number ofshares of Class A common stock reserved thereunder, and our 2017 Plan also provides for increasesin the number of shares of Class A common stock reserved thereunder based on awards under our2016 Plan and 2006 Plan that expire, are forfeited or otherwise repurchased by us. See the sectiontitled “Executive Compensation—Employee Benefit and Stock Plans” for additional information.

To the extent that any outstanding options to purchase shares of our Class B common stock orwarrants to purchase shares of our Class B common stock or convertible preferred stock areexercised, outstanding RSUs vest, or new awards are granted under our equity compensation plans,there will be further dilution to investors participating in this offering.

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SELECTED CONSOLIDATED FINANCIAL AND OTHER DATA

The consolidated statements of operations data for the years ended December 31, 2014, 2015,and 2016, and the consolidated balance sheet data as of December 31, 2015 and 2016, have beenderived from our audited consolidated financial statements included elsewhere in this prospectus. Theconsolidated balance sheet data as of December 31, 2014 has been derived from our auditedconsolidated financial statements not included in this prospectus. Our historical results are notnecessarily indicative of the results that may be expected in the future. You should read theconsolidated financial and other data set forth below in conjunction with the section titled“Management’s Discussion and Analysis of Financial Condition and Results of Operations” and ourconsolidated financial statements and related notes included elsewhere in this prospectus.


2014 2015 2016

(In thousands, except share and per sharedata)

Consolidated Statements of Operations Data:Revenue:

Subscription and support . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 48,436 $ 88,096 $ 152,843Professional services and other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9,181 22,156 34,904

Total revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57,617 110,252 187,747Cost of revenue:

Subscription and support(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,304 7,525 13,722Professional services and other(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11,509 24,645 35,341

Total cost of revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16,813 32,170 49,063

Gross profit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40,804 78,082 138,684Operating expenses:

Research and development(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17,046 24,725 32,862Sales and marketing(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58,676 93,057 122,630General and administrative(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11,911 24,368 31,577

Total operating expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 87,633 142,150 187,069

Loss from operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (46,829) (64,068) (48,385)Interest income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49 220 465Other expense, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (248) (729) (340)

Net loss before provision for income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (47,028) (64,577) (48,260)Provision for income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 728 862 1,339

Net loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ (47,756) $ (65,439) $ (49,599)

Net loss attributable to common stockholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ (47,756) $ (65,439) $ (59,035)

Net loss per share attributable to common stockholders, basic and diluted(2) . . . . . . $ (3.07) $ (3.57) $ (2.73)

Shares used to compute net loss per share attributable to common stockholders,basic and diluted(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15,531,314 18,324,048 21,623,610

Pro forma net loss per share, basic and diluted (unaudited)(2) . . . . . . . . . . . . . . . . . . $ (0.45)

Shares used to compute pro forma net loss per share, basic and diluted(unaudited)(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 110,919,770

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(1) Includes stock-based compensation expense and other compensation expense related to the 2015 Common StockRepurchase and 2016 Tender Offer as follows (in thousands):


2014 2015 2016

Cost of revenue—subscription and support . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 26 $ 146 $ 255Cost of revenue—professional services and other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 76 324 675Research and development . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 238 2,506 2,831Sales and marketing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 569 4,891 8,619General and administrative . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 520 4,542 4,120

Total stock-based and other compensation expense . . . . . . . . . . . . . . . . . . . . . . . . . . . $1,429 $12,409 $16,500

See the section titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations” forfurther information about the 2015 Common Stock Repurchase and 2016 Tender Offer.

(2) See Notes 2, 11, and 12 to our consolidated financial statements included elsewhere in this prospectus for an explanationof the calculations of our basic and diluted net loss per share attributable to common stockholders, pro forma net loss pershare, and the weighted-average number of shares used in the computation of the per share amounts.

As of December 31,

2014 2015 2016

(In thousands)Consolidated Balance Sheet Data:Cash, cash equivalents, and investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 50,097 $110,618 $102,613Working capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21,708 37,234 33,550Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 83,583 174,049 202,938Deferred revenue, current and non-current . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46,927 82,522 135,614Convertible preferred stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 130,577 256,903 255,946Total stockholders’ equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22,991 72,670 40,103

Key Metrics

We monitor the following key metrics to help us evaluate our business, identify trends affectingour business, formulate business plans, and make strategic decisions.

December 31,

2014 2015 2016

Customers (as of end of period) . . . . . . . . . . . . . . . . . . . . . . 590 839 1,071Average subscription and support revenue per customer

(in thousands) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 82 $ 105 $ 143Dollar-based net retention rate . . . . . . . . . . . . . . . . . . . . . . . 110% 121% 117%

For a discussion of our key metrics, see the section titled “Management’s Discussion andAnalysis of Financial Condition and Results of Operations—Key Metrics.”


Free Cash Flow and Free Cash Flow Margin

Free cash flow is a non-GAAP financial measure that we calculate as net cash (used in) providedby operating activities less purchases of property and equipment. Free cash flow margin is calculatedas free cash flow divided by total revenue. We believe that free cash flow and free cash flow marginare useful indicators of liquidity that provide information to management and investors about theamount of cash generated from our core operations that, after the purchases of property andequipment, can be used for strategic initiatives, including investing in our business and making

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strategic acquisitions. See the section titled “—Reconciliation of Non-GAAP Financial Measures” forinformation regarding the limitations of using free cash flow and free cash flow margin as financialmeasures and for a reconciliation of free cash flow and free cash flow margin to net cash (used in)operating activities, the most directly comparable financial measure calculated in accordance withGAAP.



2014 2015 2016

Free cash flow (in thousands) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $(41,753) $(48,640) $(7,203)Free cash flow margin . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (72.5)% (44.1)% (3.8)%

Reconciliation of Non-GAAP Financial Measures

Our use of free cash flow and free cash flow margin has limitations as an analytical tool and youshould not consider it in isolation or as a substitute for an analysis of our results under GAAP. First,free cash flow is not a substitute for net cash (used in) provided by operating activities. Second, othercompanies may calculate free cash flow, free cash flow margin or similarly titled non-GAAP financialmeasures differently or may use other measures to evaluate their performance, all of which couldreduce the usefulness of free cash flow and free cash flow margin as a tool for comparison.Additionally, the utility of free cash flow as a measure of our financial performance and liquidity isfurther limited as it does not represent the total increase or decrease in our cash balance for a givenperiod. Because of these and other limitations, you should consider free cash flow and free cash flowmargin along with our GAAP financial results.

The following table presents a reconciliation of free cash flow and free cash flow margin to netcash (used in) provided by operating activities:


2014 2015 2016


Net cash used in operating activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . $(39,647) $(47,134) $(2,702)Less: Purchases of property and equipment . . . . . . . . . . . . . . . . . . (2,106) (1,506) (4,501)

Free cash flow . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $(41,753) $(48,640) $(7,203)

Net cash used in operating activities (as a percentage of revenue) . . . . (68.8)% (42.7)% (1.4)%Less: Purchases of property and equipment (as a percentage of

revenue) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (3.7)% (1.4)% (2.4)%

Free cash flow margin . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (72.5)% (44.1)% (3.8)%

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MANAGEMENT’S DISCUSSION AND ANALYSIS OFFINANCIAL CONDITION AND RESULTS OF OPERATIONS

You should read the following discussion and analysis of our financial condition and results ofoperations together with the section titled “Selected Consolidated Financial and Other Data” and theconsolidated financial statements and related notes that are included elsewhere in this prospectus.This discussion contains forward-looking statements that involve risks and uncertainties. Our actualresults may differ materially from those anticipated in these forward-looking statements as a result ofvarious factors, including, but not limited to, those set forth in the section titled “Risk Factors” and inother parts of this prospectus. Our historical results are not necessarily indicative of the results thatmay be expected for any period in the future, and our interim results are not necessarily indicative ofthe results we expect for the full fiscal year or any other period.

Overview

We are enabling a fundamental shift in organizations’ technology operating models by equippingthem to create composable, agile infrastructures. Our customers use our Anypoint Platform to connecttheir applications, data, and devices into an application network where IT assets are pluggable insteadof glued together with custom integration code. The application network enables a self-serveinfrastructure through discoverable building blocks, or nodes, that can be used and reused to rapidlycompose applications. As a result, the IT organization delivers projects faster and lines of business areable to innovate and respond more rapidly. With an application network built with Anypoint Platform,organizations can transform into composable enterprises.

We were incorporated in 2006. Our founder, Ross Mason, created Mule, the technology at thecore of our platform, to address the frustrations of manually connecting disparate systems andapplications. Mule took its name from Ross’s desire to take the “donkey work” out of legacyapproaches to technology integration, and Mule remains the core runtime engine of our platform to thisday.

Our earliest enterprise solution, built on Mule, enabled customers to integrate their on-premisesback-end systems across a broad range of use cases. Since 2006, we have invested substantially inmaking it easier for developers to rapidly build integrations, introducing capabilities such as graphicaltooling for designing integration flows, a rich library of out-of-the-box connectors, and a simplified dataquery language coupled with graphical data-mapping for data integration. In parallel, we have alsoinvested heavily to build an enterprise-grade platform with high availability, security, and managementcapabilities.

In 2011, anticipating that the adoption of SaaS and cloud platforms was reaching an inflectionpoint, we introduced CloudHub, a multi-tenant iPaaS. CloudHub is built on the core Mule runtimeengine and enables our customers to connect applications, data, and devices entirely within our cloudenvironment. In 2013, as the number of public and private APIs accelerated to make data available toa broad range of applications and devices, we launched an API management solution, whichintroduced full-lifecycle API management to complement our existing integration capabilities andhelped our customers drive discovery and reuse of their IT assets.

In 2014, we introduced Anypoint Platform, which brought all of our core capabilities together.Anypoint Platform is a hybrid integration platform that supports any integration use case, including on-premises integration, cloud-based integration, and full-lifecycle API management. Our customersbegan deploying Anypoint Platform in a more strategic fashion, not just solving tactical integrationproblems but rather driving consumability and reuse of their IT investments through API-led

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connectivity. In 2015, we introduced Anypoint Exchange to further help our customers drivediscoverability and reuse of IT assets, so that they can more rapidly compose new applications acrosstheir organizations. The emphasis on discoverability and consumability of IT assets enabled ourcustomers to adopt a new technology operating model and increase the agility of their businesses bybuilding application networks.

As we have broadened the functionality of our platform, we have become a more strategic partnerfor our customers. Consequently, the average annual contract value of subscription and supportcontracts, or ACV, with new customers has increased from approximately $77,000 in 2014 to $117,000in 2015 to $169,000 in 2016. For multi-year subscription and support contracts, the ACV is determinedby dividing the total contract value of such contracts by the number of years in the subscription period.

We generate revenue primarily from sales of software subscriptions to our platform. Oursubscription pricing is based primarily on the amount of computing capacity on which our customersrun our software. We offer the same capacity-based pricing model regardless of whether customerschoose to deploy our platform on-premises or in the cloud. Our subscriptions are term-based, and werecognize revenue from subscriptions ratably over the subscription term. The substantial majority ofour subscription and support revenue is derived from subscriptions that are one year in duration andinvoiced upfront, although a growing number of our customers are entering into multi-yearsubscriptions. When we enter into a multi-year subscription, we typically invoice the customer on anannual basis.

We also generate revenue from professional services, which consist primarily of fees associatedwith consulting and training services. Revenue derived from professional services is generallyrecognized as the services are rendered. We will continue to invest in our professional servicesorganization because we believe it plays an important role in accelerating our customers’ realization ofthe benefits of the platform, which helps to drive customer retention and expansion. A significantpercentage of our customers purchase our professional services when they enter into new orexpanded subscriptions.

We currently have over 1,000 customers located in over 60 countries across every majorindustry, including 30 customers with over $1.0 million in ACV. Our customers include Citrix, TheCoca-Cola Company, Dixons Carphone, McDonald’s, Office Depot Europe B.V., Salesforce,ServiceNow, Spotify, State of Colorado, Toyota Motor Corporation Australia, and Unilever, each ofwhich accounted for at least $100,000 in subscription and support revenue in 2016. We sell toorganizations worldwide primarily through our direct sales efforts. Although our platform can beadopted by organizations of nearly any size, we focus our sales efforts on the largest globalorganizations. Our sales efforts are targeted towards CIOs, chief IT architects, and line of businessleaders, who are driving digital transformation. We also partner with SIs that enhance our salesleverage by sourcing new prospects and providing systems integration services on implementations ofour platform.

Historically, customers have expanded their spend with us over time as they realize the benefits ofspeed and innovation that come with our platform. Our customers expand the use of our platform in twoways. First, they deploy additional capacity as the usage of applications built on our platform increases.Second, as they address additional use cases with their application network, their usage of our platformfurther increases. The expanded use of our platform by our customers is evidenced by our high dollar-based net retention rate. In addition, we have grown the number of our customers with over $1.0 millionin ACV from five as of December 31, 2014 to 30 as of December 31, 2016.

We have grown rapidly in recent periods. Our revenue for 2014, 2015, and 2016 was $57.6million, $110.3 million, and $187.7 million, respectively, representing a growth rate of 91% and 70%,

58

respectively. We incurred net losses of $47.8 million, $65.4 million, and $49.6 million in 2014, 2015,and 2016, respectively.

We believe the market for our platform is large and growing. While organizations currently investsignificant resources in manual integration services and integration software, the market for platformsthat enable application networks is relatively new. The growth of our customer base and marketadoption of our platform is affected in part by the pace at which organizations, particularly largeorganizations, seek to digitally transform their technology operating models from the legacy approachof custom, point-to-point integrations to the development of application networks. We have madesubstantial investments in developing our platform, expanding our sales, services, and marketingcapabilities, and providing general and administrative resources to support our growth. Specifically, wehave increased our headcount from 444 employees as of December 31, 2014 to 841 employees as ofDecember 31, 2016. We intend to continue to invest heavily to grow our business to take advantage ofour expansive market opportunity rather than optimizing for profitability or cash flow in the near future.

Key Metrics

We monitor the following key metrics to help us evaluate our business, identify trends affectingour business, formulate business plans, and make strategic decisions. We believe the following metricsare useful in evaluating our business.

Customers. We believe that the number of customers is a key metric because our ability toattract new customers and grow our customer base helps drive our success and is an importantcontributor to the growth in our revenue. We have successfully demonstrated a history of growing bothour customer base and spend per customer through increased use of our platform. As our sales forcecontinues to focus on selling Anypoint Platform to large organizations, we expect the rate of increase incustomer growth to decline, but we expect our sales model will drive higher average subscription andsupport revenue per customer.

We define the number of customers at the end of any particular period as the number of partiesor organizations that have entered into a subscription contract with us for which the term has notended, or with which we are negotiating a renewal contract. Each party with which we have enteredinto a subscription contract is considered a unique customer, and in some cases, there may be morethan one customer within a single organization. Although customers can elect not to renew theirsubscriptions by providing prior written notice to us, our subscription contracts typically have automaticrenewal provisions that become effective on the expiration of a subscription contract. To the extent thatwe are negotiating a renewal with a customer after the expiration of the subscription contract, wecontinue to count such organization as a customer for a period of four months if we are actively indiscussion with such organization for a new subscription contract or a contract renewal, or until suchorganization notifies us that it is not renewing its subscription contract, if earlier.

The following table sets forth the number of customers:

As of December 31,

2014 2015 2016

Customers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 590 839 1,071

Average Subscription and Support Revenue per Customer. We believe that averagesubscription and support revenue per customer is a key metric because it is a reflection of ourcustomers’ growing commitment to our platform and our sales force’s productivity.

We define average subscription and support revenue per customer as subscription and supportrevenue for a trailing 12-month period divided by the number of customers as of the end of the period.

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The following table sets forth the average subscription and support revenue per customer:


2014 2015 2016

(In thousands)Average subscription and support revenue per customer . . . . . $ 82 $ 105 $ 143

Dollar-Based Net Retention Rate. We believe that dollar-based net retention rate is a keymetric to measure the long-term value of our customer relationships and is driven by our ability toretain and expand the subscription and support revenue generated from our existing customers. Ourdollar-based net retention rate compares our subscription and support revenue from the same set ofcustomers across comparable periods.

We calculate our dollar-based net retention rate for all periods on a trailing four-quarter basis. Tocalculate our dollar-based net retention rate, we first calculate the subscription and support revenue inone quarter from a cohort of customers that were customers at the beginning of the same quarter inthe prior fiscal year, or Cohort Customers. We repeat this calculation for each quarter in the trailingfour-quarter period. The numerator for dollar-based net retention rate is the sum of subscription andsupport revenue from Cohort Customers for the four most recent quarters, or Numerator Period, andthe denominator is the sum of subscription and support revenue from Cohort Customers for the fourquarters preceding the Numerator Period.

Dollar-based net retention rate is the quotient obtained by dividing the numerator by thedenominator. Our dollar-based net retention rate may fluctuate as a result of a number of factors,including our customers’ satisfaction or dissatisfaction with our platform, the increase in the contractvalue of subscription and support contracts from new customers, and the other risk factors included inthis prospectus.

The following table sets forth the dollar-based net retention rates:


2014 2015 2016

Dollar-based net retention rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 110% 121% 117%


Free Cash Flow and Free Cash Flow Margins

Free cash flow is a non-GAAP financial measure that we calculate as net cash (used in) providedby operating activities less purchases of property and equipment. Free cash flow margin is calculated asfree cash flow divided by total revenue. We believe that free cash flow and free cash flow margin areuseful indicators of liquidity that provide information to management and investors about the amount ofcash generated from our core operations that, after the purchases of property and equipment, can beused for strategic initiatives, including investing in our business and making strategic acquisitions. Seethe section titled “Selected Consolidated Financial and Other Data—Non-GAAP Financial Measures—Reconciliation of Non-GAAP Financial Measures” for information regarding the limitations of using freecash flow and free cash flow margin as financial measures.



2014 2015 2016

Free cash flow (in thousands) . . . . . . . . . . . . . . . . . . . . . . . $(41,753) $(48,640) $(7,203)Free cash flow margin . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (72.5)% (44.1)% (3.8)%

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The following table presents a reconciliation of free cash flow and free cash flow margin to netcash (used in) provided by operating activities, the most directly comparable financial measurecalculated in accordance with GAAP:


2014 2015 2016


Net cash used in operating activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . $(39,647) $(47,134) $(2,702)Less: Purchases of property and equipment . . . . . . . . . . . . . . . . . . (2,106) (1,506) (4,501)

Free cash flow . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $(41,753) $(48,640) $(7,203)

Net cash used in operating activities (as a percentage of revenue) . . . . (68.8)% (42.7)% (1.4)%Less: Purchases of property and equipment (as a percentage of

revenue) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (3.7)% (1.4)% (2.4)%

Free cash flow margin . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (72.5)% (44.1)% (3.8)%

Cohort Analysis

We have a history of attracting new customers and expanding their annual spend with us overtime by deploying additional capacity and addressing additional use cases for their applicationnetworks. Specifically, the chart below illustrates the total ACV from each cohort over the fiscal yearspresented. Each cohort represents customers who made their initial purchase from us in a given fiscalyear. For example, the fiscal year 2012 cohort represents all customers who made their initial purchasefrom us between January 1, 2012 and December 31, 2012. The fiscal year 2012 cohort increased theirACV from $4.5 million in fiscal year 2012 to $11.2 million in fiscal year 2016, representing a multiple of2.5x and a compound annual growth rate in excess of 25%.

In addition, the ACV from customers that represented more than $1.0 million in ACV in 2016 hasincreased to an average of 6.0x the ACV of such customers’ initial purchases made in 2012 or later.

Annual Contract Value of Subscriptionand Support Contracts

$ in Millions$200

$100

2012

FY12 FY13 FY14 FY15 FY16

2013 2014 2015 2016

$200

$100

$0

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Components of Results of Operations

Revenue. We generate revenue from the following sources: (i) subscription and supportrevenue, which is comprised of subscription fees from customers accessing our cloud-hosted softwareand from term-based licenses of our software and support services; and (ii) professional services andother, which consists primarily of fees associated with consulting and training services related to theimplementation and configuration of our platform.

We recognize subscription and support revenue from our cloud-hosted software ratably over theterm of the arrangement. Term-based licenses are sold with support services and are recognizedratably over the life of the license or support period. Our subscriptions are typically one year induration, although a growing number of our customers are entering into multi-year subscriptions. Wegenerally invoice our customers in annual installments at the beginning of each year in the subscriptionperiod. Amounts that have been invoiced are initially recorded as deferred revenue and are recognizedratably over the subscription period.

Professional services and other revenue is generally recognized as the services are rendered fortime-and-material contracts or on a proportional performance basis for fixed-price contracts. Revenuefrom professional services sold exclusively with term-based licenses is recognized over the term of thesubscription. We will continue to invest in our professional services because we believe that it plays animportant role in enabling our customers to achieve success on our platform and accelerate theirrealization of its benefits, which helps to drive retention of, and expansion with, our customers.

Cost of Revenue. Cost of revenue for subscription and support consists primarily of cloud-hosting costs and personnel-related costs of our customer support organization, including salaries,bonuses, benefits, stock-based compensation, commissions, and other compensation related to theequity transactions described below, as well as contractor costs to supplement our staff levels, third-party software royalties, and allocated overhead.

Cost of revenue for professional services and other revenue consists primarily of personnel-related costs of our consulting and training departments, including salaries, bonuses, benefits, stock-based compensation, commissions, and other compensation related to the equity transactionsdescribed below, as well as contractor costs to supplement our staff levels, and allocated overhead.

Gross Profit and Gross Margin. Gross profit, or total revenue less total cost of revenue, andgross margin, or gross profit as a percentage of total revenue, has been and will continue to beaffected by various factors, including the mix among our subscription and support and professionalservices and other revenue, the costs associated with third-party hosting services for our cloud-basedsubscriptions, and the extent to which we expand our customer support and professional servicesorganizations. Our gross margin on subscription and support revenue is significantly higher than ourgross margin on professional services and other revenue. We expect our gross margin will fluctuatefrom period to period depending on the interplay of these various factors.

Operating Expenses. Our operating expenses consist of research and development, sales andmarketing, and general and administrative expenses. The most significant component of each of ouroperating expense categories is personnel-related costs, including salaries, bonuses, benefits, stock-based compensation, and other compensation related to the equity transactions described below, andwith respect to sales and marketing, sales commissions and incentives.

Research and Development Expenses. Research and development expenses consist primarily ofpersonnel-related costs for the design and development of our platform and technologies, contractorcosts to supplement our staff levels, third-party web services, consulting services, costs associated

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with our company-wide meeting, and allocated overhead. We expense research and developmentexpenses as they are incurred. Historically, a significant percentage of our research and developmenthas been conducted by our personnel in Argentina, which has provided a substantial cost-advantage inresearch and development expenses. We expect our research and development expenses to increasein absolute dollars and may increase as a percentage of our total revenue over time, as we expand ourresearch and development team to develop new products and product enhancements.

Sales and Marketing Expenses. Our sales and marketing expenses consist primarily ofpersonnel-related costs for our sales and marketing employees, marketing programs including tradeshows, costs associated with our company-wide meeting, and allocated overhead. We expect that oursales and marketing expenses will increase in absolute dollars and may fluctuate as a percentage ofour total revenue from period to period as we hire additional sales and marketing personnel, increaseour marketing activities, grow our domestic and international operations, and build brand awareness.

General and Administrative Expenses. Our general and administrative expenses consist primarilyof personnel-related costs for executive, finance, legal, human resources, and administrativepersonnel, as well as professional fees for external legal, accounting, recruiting and other consultingservices, costs associated with our company-wide meeting, and allocated overhead. Following thecompletion of this offering, we expect to incur additional general and administrative expenses as aresult of operating as a public company, including expenses related to compliance with the rules andregulations of the SEC and listing standards of the New York Stock Exchange, additional insuranceexpenses, investor relations activities and other administrative and professional services. We alsoexpect to increase the size of our general and administrative function to support the growth of ourbusiness. As a result, we expect that our general and administrative expenses will increase in absolutedollars but may fluctuate as a percentage of our total revenue from period to period.

Interest Income. Interest income consists primarily of income earned on our cash equivalentsand investments in marketable securities.

Other Expense, Net. Other expense, net consists primarily of foreign currency transaction gainsand losses related to the impact of transactions denominated in a foreign currency other than thefunctional currencies of our legal entities. As we have expanded our international operations, ourexposure to fluctuations in foreign currencies has increased, and we expect this to continue.

Income Tax Expense. Provision for income taxes consists primarily of income taxes in certainforeign jurisdictions in which we conduct business. As we have expanded our international operations,we have incurred increased foreign tax expense, and we expect this to continue. We have a fullvaluation allowance for net deferred tax assets, including net operating loss carryforwards, and taxcredits related primarily to research and development for our operations in the United States. Weexpect to maintain this full valuation allowance for the foreseeable future. We also have deferred taxassets or liabilities in certain of our foreign subsidiaries including in the United Kingdom, Argentina andAustralia.

Equity Transactions. In the third quarter of 2015, following our Series G convertible preferredstock financing, we repurchased shares from certain of our eligible employees and board members(the 2015 Common Stock Repurchase). A total of 2,224,222 shares of common stock were tenderedfor a total purchase price of $25.0 million. The price paid up to the fair value of our common stock,totaling $15.9 million, was accounted for as a reduction to equity. The premium that we paid over thefair value of the shares, totaling $9.1 million, was recorded as other compensation expense.

In the third quarter of 2016, certain of our eligible employees, board members and funds affiliatedwith board members sold shares to third party investors (the 2016 Tender Offer). A total of

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4,346,203 shares of common stock were tendered for a total purchase price of $61.6 million. Thepremium over the fair value of the shares of common stock that was paid by third parties to eligibleemployees and board members, totaling $9.9 million, was recorded as other compensation expense.The excess of the sale price of the shares of convertible preferred stock sold by funds affiliated withboard members over the fair value of our common stock, totaling $9.4 million, was recorded as adeemed dividend within additional paid-in capital.

Results of Operations

The following table sets forth our results of operations for the periods indicated:


2014 2015 2016

(In thousands)

Consolidated Statements of Operations Data:Revenue:

Subscription and support . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 48,436 $ 88,096 $152,843Professional services and other . . . . . . . . . . . . . . . . . . . . . . . . . . . 9,181 22,156 34,904

Total revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57,617 110,252 187,747Cost of revenue:

Subscription and support(1)(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,304 7,525 13,722Professional services and other(1)(2) . . . . . . . . . . . . . . . . . . . . . . . . 11,509 24,645 35,341

Total cost of revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16,813 32,170 49,063

Gross profit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40,804 78,082 138,684Operating expenses:

Research and development(1)(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . 17,046 24,725 32,862Sales and marketing(1)(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58,676 93,057 122,630General and administrative(1)(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . 11,911 24,368 31,577

Total operating expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . 87,633 142,150 187,069

Loss from operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (46,829) (64,068) (48,385)Interest income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49 220 465Other expense, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (248) (729) (340)

Net loss before provision for income taxes . . . . . . . . . . . . . . . . . . . . . . (47,028) (64,577) (48,260)Provision for income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 728 862 1,339

Net loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $(47,756) $ (65,439) $ (49,599)

(1) Includes stock-based compensation expense as follows (in thousands):


2014 2015 2016

Cost of revenue—subscription and support . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 26 $ 83 $ 231Cost of revenue—professional services and other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 76 262 567Research and development . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 238 579 1,677Sales and marketing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 569 1,548 2,691General and administrative . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 520 846 1,386

Total stock-based compensation expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $1,429 $3,318 $6,552

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(2) Includes other compensation expense related to the 2015 Common Stock Repurchase and 2016 Tender Offer as follows(in thousands):


2014 2015 2016

Cost of revenue—subscription and support . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ — $ 63 $ 24Cost of revenue—professional services and other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — 62 108Research and development . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — 1,927 1,154Sales and marketing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — 3,343 5,928General and administrative . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — 3,696 2,734

Total other compensation expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ — $9,091 $9,948

The following table sets forth the consolidated statements of operations data for each of theperiods presented as a percentage of total revenue:


2014 2015 2016

Consolidated Statements of Operations, as a percentage of revenue:Revenue:

Subscription and support . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 84% 80% 81%Professional services and other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16 20 19

Total revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 100 100 100Cost of revenue:

Subscription and support . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 7 7Professional services and other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20 22 19

Total cost of revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29 29 26

Gross profit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71 71 74Operating expenses:

Research and development . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30 22 18Sales and marketing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 102 84 65General and administrative . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21 22 17

Total operating expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 152 129 100

Loss from operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (81) (58) (26)Interest income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — — —Other expense, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — (1) —

Net loss before provision for income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (82) (59) (26)Provision for income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 1 1

Net loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (83)% (59)% (26)%

Comparison of the Years Ended December 31, 2015 and 2016

Revenue

Year Ended December 31, Change

2015 2016 Amount %


Subscription and support . . . . . . . . . . . . . . . . . . . . . $ 88,096 $152,843 $64,747 73%Professional services and other . . . . . . . . . . . . . . . . 22,156 34,904 12,748 58%

Total revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . $110,252 $187,747 $77,495 70%

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Subscription and support revenue increased by $64.7 million, or 73%, to $152.8 million during2016, from $88.1 million during 2015. Approximately 60% of the increase was attributable to theexpanded use of our platform by existing customers, and the remainder was attributable to sales ofsubscriptions to new customers. Our total number of customers increased from 839 as ofDecember 31, 2015 to 1,071 as of December 31, 2016.

Professional services and other revenue increased by $12.7 million, or 58%, to $34.9 millionduring 2016, from $22.2 million during 2015. The increase was primarily attributable to the increase inconsulting services to support our larger customer base.

Cost of Revenue and Gross Margin

Year EndedDecember 31, Change

2015 2016 Amount %


Subscription and support . . . . . . . . . . . . . . . . . . . . . . . $ 7,525 $13,722 $ 6,197 82%Professional services and other . . . . . . . . . . . . . . . . . . 24,645 35,341 10,696 43%

Total cost of revenue . . . . . . . . . . . . . . . . . . . . . . . $32,170 $49,063 $16,893 53%

Subscription and support gross margin . . . . . . . . . . . . 91% 91%Professional services and other gross margin . . . . . . (11)% (1)%

Gross margin . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71% 74%

Cost of revenue for subscription and support increased by $6.2 million, or 82%, to $13.7 millionduring 2016, from $7.5 million during 2015. The increase was primarily due to an increase of $2.2million in third-party cloud-hosting costs, an increase of $1.5 million in personnel-related expenses,primarily due to an increase in headcount, as well as an increase of $1.4 million in contractor costs andan increase of $0.3 million in royalty costs.

Cost of revenue for professional services and other increased by $10.7 million, or 43%, to $35.3million during 2016, from $24.6 million during 2015. The increase was primarily due to an increase inpersonnel-related costs of $5.8 million, primarily due to an increase in headcount, as well as anincrease of $2.9 million in contractor costs to supplement our staffing and an increase in travel costs of$1.0 million.

Gross margin improved during 2016, as we experienced increased leverage from ourprofessional services organization and, to a lesser extent, an increase in subscription and supportrevenue, which carries a higher gross margin than professional services.

Operating Expenses


2015 2016 Amount %


Research and development . . . . . . . . . . . . . . . . . . . $ 24,725 $ 32,862 $ 8,137 33%Sales and marketing . . . . . . . . . . . . . . . . . . . . . . . . . 93,057 122,630 29,573 32%General and administrative . . . . . . . . . . . . . . . . . . . . 24,368 31,577 7,209 30%

Total operating expenses . . . . . . . . . . . . . . . . . $142,150 $187,069 $44,919 32%

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Research and Development

Research and development expenses increased by $8.1 million, or 33%, to $32.9 million during2016, from $24.7 million during 2015. The increase was primarily attributable to an increase inpersonnel-related costs of $4.7 million, primarily due to an increase in headcount. These costsincluded an increase of $1.1 million of stock-based compensation expense offset by a reduction of$0.8 million in other compensation expense from the equity transactions described above. In addition,there was also an increase of $1.5 million in third-party cloud-hosting costs for internal use, anincrease of $0.6 million in outside contractor costs, and $0.4 million in costs incurred for the company-wide meeting held in February 2016.

Sales and Marketing

Sales and marketing expenses increased by $29.6 million, or 32%, to $122.6 million during 2016from $93.1 million during 2015. The increase was primarily attributable to an increase in personnel-related costs of $22.2 million, primarily due to an increase in headcount, including an increase of$8.2 million in commissions. These costs included an increase of $2.6 million in other compensationexpense from the equity transactions described above and an increase of $1.1 million in stock-basedcompensation expense. In addition, there was also an increase of $3.2 million in marketing costsrelated to advertising, and domestic and international tradeshows, $1.4 million in travel andentertainment costs, and $1.0 million in costs incurred for the company-wide meeting held in 2016.

General and Administrative

General and administrative expenses increased by $7.2 million, or 30%, to $31.6 million during2016 from $24.4 million during 2015. The increase was primarily attributable to an increase inpersonnel-related costs of $3.2 million, primarily due to an increase in headcount. These costsincluded an increase of $0.5 million in stock-based compensation expense offset by a $1.0 millionreduction in other compensation expense from the equity transactions described above. The increasewas also attributable to an increase of $1.0 million in professional services for legal and accountingservices, $0.9 million in recruiting costs as we hired additional staff to support our growth, $0.5 millionin costs incurred for the company-wide meeting held in 2016, and an increase of $0.4 million insoftware subscription costs for our operations.

Interest Income


2015 2016 Amount %

(In thousands, except percentage)

Interest income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $220 $465 $245 111%

Interest income was $0.5 million in 2016 compared to $0.2 million in 2015. The increase wasprimarily related to an increase in our invested funds due to the proceeds from the Series G preferredstock financing completed in May 2015.

Other Expense, Net


2015 2016 Amount %


Other expense, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $(729) $(340) $389 53%

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Other expense, net was $0.3 million in 2016 compared to $0.7 million in 2015. The change wasprimarily related to foreign currency fluctuations.

Provision for Income Taxes


2015 2016 Amount %


Provision for income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . $862 $1,339 $477 55%

Provision for income taxes for each period was primarily attributable to foreign taxes incurred bycertain non-U.S. subsidiaries and foreign withholding taxes. In 2015, we sold the non-U.S. rights tocertain intellectual property to one of our non-U.S. subsidiaries. The resulting tax gain in our U.S. entitywas offset by current year net operating losses and thus resulted in no current tax liability. Further, thistransaction had no net impact on our 2015 deferred taxes or effective tax rate given our full valuationallowance on the net operating losses used to offset the gain. Our decision to move certain intellectualproperty outside of the United States is not expected to materially impact our effective tax rate for theforeseeable future as we continue to generate net operating losses in the United States and the non-U.S. subsidiary to which we sold certain intellectual property.

Comparison of the Years Ended December 31, 2014 and 2015

Revenue


2014 2015 Amount %


Subscription and support . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $48,436 $ 88,096 $39,660 82%Professional services and other . . . . . . . . . . . . . . . . . . . . . . . . . . . 9,181 22,156 12,975 141%

Total revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $57,617 $110,252 $52,635 91%

Subscription and support revenue increased by $39.7 million, or 82%, to $88.1 million during2015, from $48.4 million during 2014. Approximately 55% of the increase was attributable to theexpanded use of our platform by existing customers. This dynamic is reflected in our dollar-based netretention rate of 121% as of December 31, 2015. In addition, to a lesser extent, the increase inrevenue was attributable to the increase in customers from 590 as of December 31, 2014 to 839 as ofDecember 31, 2015. The increase in subscription and support revenue was also attributable to growthin the average subscription and support revenue per customer from approximately $82,000 for 2014 toapproximately $105,000 for 2015.

Professional services and other revenue increased by $13.0 million, or 141%, to $22.2 millionduring 2015, from $9.2 million during 2014. The increase was primarily attributable to the increase inconsulting services to support our larger customer base.

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Cost of Revenue and Gross Margin


2014 2015 Amount %


Subscription and support . . . . . . . . . . . . . . . . . . . . . . $ 5,304 $ 7,525 $ 2,221 42%Professional services and other . . . . . . . . . . . . . . . . . 11,509 24,645 13,136 114%

Total cost of revenue . . . . . . . . . . . . . . . . . . . . . . $16,813 $32,170 $15,357 91%

Subscription and support gross margin . . . . . . . . . . . 89% 91%Professional services and other gross margin . . . . . (25)% (11)%

Gross margin . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71% 71%

Cost of revenue for subscription and support increased by $2.2 million, or 42%, to $7.5 millionduring 2015, from $5.3 million during 2014. The increase was primarily due to an increase of $1.5million in third-party cloud-hosting costs and an increase of $0.6 million in personnel-related expenses,primarily due to an increase in headcount.

Cost of revenue for professional services and other increased by $13.1 million, or 114%, to $24.6million during 2015 from $11.5 million during 2014. The increase was primarily due to an increase of$6.6 million in contractor costs to supplement our staffing and an increase of $5.4 million in personnel-related costs, primarily due to an increase in headcount to support the growth in our operations.

Professional services and other gross margin improved to (11)% from (25)% as we experiencedincreased leverage from our professional services organization.

Operating Expenses


2014 2015 Amount %


Research and development . . . . . . . . . . . . . . . . . . . $17,046 $ 24,725 $ 7,679 45%Sales and marketing . . . . . . . . . . . . . . . . . . . . . . . . . 58,676 93,057 34,381 59%General and administrative . . . . . . . . . . . . . . . . . . . . 11,911 24,368 12,457 105%

Total operating expenses . . . . . . . . . . . . . . . . . $87,633 $142,150 $54,517 62%


Research and development expenses increased by $7.7 million, or 45%, to $24.7 million during2015 from $17.0 million during 2014. The increase was primarily attributable to an increase inpersonnel-related costs of $7.2 million, primarily due to an increase in headcount. These costsincluded an increase of $1.9 million in other compensation expense as a result of the equitytransactions described above and an increase of $0.3 million in stock-based compensation expense.

Sales and Marketing

Sales and marketing expenses increased by $34.4 million, or 59%, to $93.1 million during 2015from $58.7 million during 2014. The increase was primarily attributable to an increase in personnel-related costs of $31.5 million, primarily due to an increase in headcount. These costs included anincrease of $3.3 million in other compensation expense as a result of the equity transactions described

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above and an increase of $1.0 million in stock-based compensation expense. In addition, marketingprograms and advertising expense increased $1.4 million from the previous year due to increasedmarketing costs for advertising and domestic and international trade shows. Software applicationscosts increased by $1.2 million due to support for the growth of the sales and marketing team.

General and Administrative

General and administrative expenses increased by $12.5 million or 105%, to $24.4 million during2015 from $11.9 million during 2014. The increase was attributable to an increase in personnel-relatedcosts of $7.0 million, primarily due to an increase in headcount. These costs included an increase of$3.7 million in other compensation expense as a result of the equity transactions described above andan increase of $0.3 million in stock-based compensation expense. There was also an increase of $1.9million in recruiting costs as we continued to hire more personnel to meet our growth needs, anincrease of $1.4 million in professional services fees primarily related to an increase in legal andaccounting fees, and an increase of $0.7 million in software subscription costs for our operations. Inaddition, the 2014 expense benefited from a $1.4 million reversal of a sales tax accrual.

Interest Income


2014 2015 Amount %


Interest income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $49 $220 $171 349%

Interest income was $0.2 million in 2015 compared to $49,000 in 2014. The change was primarilyrelated to the increase in invested funds related to proceeds from the Series G preferred stockfinancing completed in May 2015.

Other Expense, Net


2014 2015 Amount %


Other expense, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $(248) $(729) $(481) (194)%

Other expense, net was $0.7 million during 2015 compared to $0.2 million during 2014. Thechange was primarily related to foreign currency fluctuations.

Provision for Income Taxes


2014 2015 Amount %


Provision for income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $728 $862 $134 18%

Provision for income taxes for each period was primarily attributable to foreign taxes incurred bycertain non-U.S. subsidiaries and foreign withholding taxes. In 2015, we sold the non-U.S. rights tocertain intellectual property to one of our non-U.S. subsidiaries. The resulting tax gain in our U.S. entitywas offset by current year net operating losses and thus resulted in no current tax liability. Further, this

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transaction had no net impact on our 2015 deferred taxes or effective tax rate given our full valuationallowance on the net operating losses used to offset the gain. Our decision to move certain intellectualproperty outside of the United States is not expected to materially impact our effective tax rate for theforeseeable future as we continue to generate net operating losses in the United States and the non-U.S. subsidiary to which we sold certain intellectual property.

Quarterly Results of Operations

The following tables set forth our unaudited quarterly consolidated statements of operations datafor each of the quarters indicated, as well as the percentage that each line item represents of our totalrevenue for each quarter presented. The information for each quarter has been prepared on a basisconsistent with our audited consolidated financial statements included in this prospectus, and reflect, inthe opinion of management, all adjustments of a normal, recurring nature that are necessary for a fairpresentation of the financial information contained in those statements. Our historical results are notnecessarily indicative of the results that may be expected in the future. The following quarterly financialdata should be read in conjunction with our consolidated financial statements included elsewhere inthis prospectus.

Three Months Ended,

Mar. 31,2015

June 30,2015

Sept. 30,2015

Dec. 31,2015

Mar. 31,2016

June 30,2016

Sept. 30,2016

Dec. 31,2016

(In thousands)Consolidated Statements of Operations:Revenue:

Subscription and support . . . . . . . . . . . $ 16,377 $ 20,097 $ 24,048 $ 27,574 $31,251 $ 35,649 $ 40,937 $ 45,006Professional services and other . . . . . . 3,749 5,807 5,978 6,622 7,780 8,345 8,432 10,347

Total revenue . . . . . . . . . . . . . . . . . 20,126 25,904 30,026 34,196 39,031 43,994 49,369 55,353

Cost of revenue:(1)(2)

Subscription and support . . . . . . . . . . . 1,603 1,624 2,143 2,155 2,580 3,371 3,589 4,182Professional services and other . . . . . . 4,904 6,690 6,625 6,426 7,172 8,461 8,756 10,952

Total cost of revenue . . . . . . . . . . . 6,507 8,314 8,768 8,581 9,752 11,832 12,345 15,134

Gross profit . . . . . . . . . . . . . . . . . . . . . . . . . . 13,619 17,590 21,258 25,615 29,279 32,162 37,024 40,219Operating expenses:(1)(2)

Research and development . . . . . . . . . 4,310 5,362 8,531 6,522 6,860 7,332 8,701 9,969Sales and marketing . . . . . . . . . . . . . . . 17,654 21,825 26,486 27,092 23,705 29,815 33,920 35,190General and administrative . . . . . . . . . . 4,335 4,068 9,244 6,721 7,283 6,843 9,555 7,896

Total operating expenses . . . . . . . 26,299 31,255 44,261 40,335 37,848 43,990 52,176 53,055

Loss from operations . . . . . . . . . . . . . . . . . . (12,680) (13,665) (23,003) (14,720) (8,569) (11,828) (15,152) (12,836)Interest income . . . . . . . . . . . . . . . . . . . . . . . 4 9 92 115 97 107 110 151Other income (expense), net . . . . . . . . . . . . (73) (181) (272) (203) 1 (107) (242) 8

Net loss before provision for incometaxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (12,749) (13,837) (23,183) (14,808) (8,471) (11,828) (15,284) (12,677)

Provision for income taxes . . . . . . . . . . . . . . 201 211 414 36 280 268 377 414

Net loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $(12,950) $(14,048) $(23,597) $(14,844) $ (8,751) $(12,096) $(15,661) $(13,091)

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(1) Includes stock-based compensation expense as follows (in thousands):

Three Months Ended,

Mar. 31,2015

June 30,2015

Sept. 30,2015

Dec. 31,2015

Mar. 31,2016

June 30,2016

Sept. 30,2016

Dec. 31,2016

Cost of revenue—subscription andsupport . . . . . . . . . . . . . . . . . . . . . . . . . $ 9 $ 20 $ 27 $ 27 $ 33 $ 55 $ 53 $ 90

Cost of revenue—professional servicesand other . . . . . . . . . . . . . . . . . . . . . . . 37 64 71 90 92 119 168 188

Research and development . . . . . . . . . . 89 131 160 199 209 329 514 625Sales and marketing . . . . . . . . . . . . . . . . 228 382 463 475 508 586 753 844General and administrative . . . . . . . . . . . 167 187 231 261 200 327 402 457

Total stock-based compensationexpense . . . . . . . . . . . . . . . . . . . . . $530 $784 $952 $1,052 $1,042 $1,416 $1,890 $2,204

(2) Includes other compensation expense as follows (in thousands):

Three Months Ended,

Mar. 31,2015

June 30,2015

Sept. 30,2015

Dec. 31,2015

Mar. 31,2016

June 30,2016

Sept. 30,2016

Dec. 31,2016

Cost of revenue—subscription andsupport . . . . . . . . . . . . . . . . . . . . . . . . . $ — $ — $ 63 $ — $ — $ — $ 24 $ —

Cost of revenue—professional servicesand other . . . . . . . . . . . . . . . . . . . . . . . — — 62 — — — 108 —

Research and development . . . . . . . . . . — — 1,927 — — — 1,154 —Sales and marketing . . . . . . . . . . . . . . . . — — 3,343 — — — 5,928 —General and administrative . . . . . . . . . . . — — 3,696 — — — 2,734 —

Total other compensationexpense . . . . . . . . . . . . . . . . . . . . $ — $ — $ 9,091 $ — $ — $ — $ 9,948 $ —

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Three Months Ended,

Mar. 31,2015

June 30,2015

Sept. 30,2015

Dec. 31,2015

Mar. 31,2016

June 30,2016

Sept. 30,2016

Dec. 31,2016

Consolidated Statements of Operations asa percentage of revenue:

Revenue:Subscription and support . . . . . . . . . . . . . . 81% 78% 80% 81% 80% 81% 83% 81%Professional services and other . . . . . . . . . 19 22 20 19 20 19 17 19

Total revenue . . . . . . . . . . . . . . . . . . . . 100 100 100 100 100 100 100 100

Cost of revenue:Subscription and support . . . . . . . . . . . . . . 8 6 7 6 7 8 7 8Professional services and other . . . . . . . . . 24 26 22 19 18 19 18 20

Total cost of revenue . . . . . . . . . . . . . . 32 32 29 25 25 27 25 27

Gross profit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68 68 71 75 75 73 75 73Operating expenses:

Research and development . . . . . . . . . . . . 21 21 28 19 18 17 18 18Sales and marketing . . . . . . . . . . . . . . . . . . 88 84 88 79 61 68 69 64General and administrative . . . . . . . . . . . . . 22 16 31 20 19 16 19 14

Total operating expenses . . . . . . . . . . 131 121 147 118 97 100 106 96

Loss from operations . . . . . . . . . . . . . . . . . . . . . (63) (53) (77) (43) (22) (27) (31) (23)Interest income . . . . . . . . . . . . . . . . . . . . . . . . . . — — — — — — — —Other income (expense), net . . . . . . . . . . . . . . . — (1) (1) (1) — — — —

Net loss before provision for income taxes . . . . (63) (53) (77) (43) (22) (27) (31) (23)Provision for income taxes . . . . . . . . . . . . . . . . . 1 1 1 — 1 1 1 1

Net loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (64)% (54)% (79)% (43)% (22)% (27)% (32)% (24)%

Mar. 31,2015

June 30,2015

Sept. 30,2015

Dec. 31,2015

Mar. 31,2016

June 30,2016

Sept. 30,2016

Dec. 31,2016

Customers(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 655 716 758 839 892 946 994 1,071Average subscription and support revenue per

customer (in thousands)(1) . . . . . . . . . . . . . . . $ 83 $ 89 $ 99 $105 $115 $125 $136 $ 143Dollar-based net retention rate(1) . . . . . . . . . . . . 106% 112% 116% 121% 125% 122% 120% 117%

(1) See the section titled “—Key Metrics” for additional information about our key metrics.

Quarterly Trends in Revenue

Our quarterly revenue increased in each period presented primarily due to an increase in thesales of subscriptions to our platform and related sales of professional services, both domestic andinternational, as a result of the expanding breadth and functionality of our platform, increasing brandawareness, and the success of our sales efforts with existing customers and new customers. Werecognize revenue from subscription fees ratably over the term of the contract. Therefore, changes inour sales activity in a period may not be apparent as a change to our revenue until future periods.

Quarterly Trends in Operating Expenses

Our operating expenses have generally increased sequentially as a result of our growth, primarilyrelated to increased personnel-related costs to support our expanded operations and our continuedinvestment in our platform and services. We experienced significant increases in operating expenses inthe third quarter of 2015 as a result of the 2015 Common Stock Repurchase and in the third quarter of2016 as a result of the 2016 Tender Offer. We also experienced increases in operating expenses in thefourth quarter of 2015 primarily as a result of year-end sales commissions. In the first quarter of 2016,we also experienced an increase in expenses associated with our company-wide meeting.

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Liquidity and Capital Resources

To date, our principal sources of liquidity have been the net proceeds we received through privatesales of equity securities, as well as payments received from customers using our platform andservices. As of December 31, 2016, we had cash, cash equivalents, and investments totaling$102.6 million, which were held for working capital purposes. Our cash equivalents are comprisedprimarily of bank deposits and money market funds, and our investments are comprised of marketablesecurities such as corporate bonds, foreign bonds and U.S. Treasury securities. We believe that ourexisting cash, cash equivalents, and investments will be sufficient to satisfy our anticipated cash needsfor working capital and capital expenditures for at least the next 12 months. We plan to continue tofinance our operations from customers paying for our platform and services and through the proceedsof this offering.

Cash Flows

The following table summarizes our cash flows for the periods indicated (in thousands):


2014 2015 2016

Cash used in operating activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $(39,647) $ (47,134) $ (2,702)Cash provided by (used in) investing activities . . . . . . . . . . . . . . . . . . . . (2,150) (95,279) 19,358Cash provided by (used in) financing activities . . . . . . . . . . . . . . . . . . . 50,963 112,463 (336)Effect of exchange rate changes on cash . . . . . . . . . . . . . . . . . . . . . . . . (300) (322) (1,044)

Net increase (decrease) in cash and cash equivalents . . . . . . . . . $ 8,866 $ (30,272) $15,276

Cash Flows from Operating Activities

During 2016, cash used in operating activities was $2.7 million, which consisted of a net loss of$49.6 million, adjusted by non-cash charges of $19.2 million and a net change of $27.7 million in ournet operating assets and liabilities. The non-cash charges are primarily comprised of othercompensation expense related to the 2016 Tender Offer of $9.9 million, stock based-basedcompensation of $6.6 million, depreciation and amortization of $1.9 million, amortization of investmentpremiums of $0.6 million, and provision for doubtful accounts of $0.2 million. The change in our netoperating assets and liabilities was primarily due to an increase in deferred revenue of $51.9 milliondue to the timing of billings and cash received in advance of revenue recognition primarily forsubscription and support services, an increase in accrued compensation of $4.7 million due to highercommissions payable at year end, an increase in accounts payable and accrued expenses of $2.2million due to an increase in operating expenses and timing of payments and an increase in otherliabilities of $1.1 million due to an increase in deferred rent, partially offset by an increase in accountsreceivable of $25.1 million due to the timing of receipts of payments from customers and an increase inprepaid expenses and other current assets of $6.8 million due to payments for software subscriptionsto our cloud infrastructure provider.

During 2015, cash used in operating activities was $47.1 million, which consisted of a net loss of$65.4 million, adjusted by non-cash charges of $5.3 million and a change of $13.0 million in our netoperating assets and liabilities. The non-cash charges were primarily comprised of stock-basedcompensation of $3.3 million, depreciation and amortization of $1.2 million, amortization of investmentpremiums of $0.6 million, and a loss on disposal of property and equipment for $0.2 million. Thechange in our net operating assets and liabilities was primarily due to an increase in deferred revenueof $35.6 million due to the timing of billings and cash received in advance of revenue recognitionprimarily for subscription and support, an increase in accrued compensation and related expenses of

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$5.0 million due to an increase in headcount and revenue in 2015, and an increase in accruedexpenses of $1.6 million, partially offset by an increase in trade receivables of $21.1 million due to anincrease in the number of customers invoiced during the period, an increase in prepaid expenses andother current assets of $6.5 million, and a decrease in accounts payable of $1.3 million due to thetiming of invoices from vendors and related payments.

During 2014, cash used in operating activities was $39.6 million, which consisted of a net loss of$47.8 million, adjusted by non-cash charges of $2.6 million and a change of $5.5 million in our netoperating assets and liabilities. The non-cash charges were primarily comprised of stock-basedcompensation of $1.4 million and depreciation and amortization of $1.1 million. The change in our netoperating assets and liabilities was primarily due to an increase in deferred revenue of $19.4 milliondue to the timing of billings and cash received in advance of revenue recognition primarily forsubscription and support, an increase in accrued compensation and related expenses of $2.2 milliondue to an increase in headcount and an increase in commissions due to revenue growth, an increasein accounts payable of $1.2 million due to timing of payments, and an increase in accrued expenses of$0.7 million due to an increase in operating expenses for the year. These changes are partially offsetby an increase in trade receivables of $16.0 million due to the timing of billings and related cashreceived, and an increase in prepaid expenses and other current assets of $2.1 million.

Cash Flows from Investing Activities

During 2016, cash provided by investing activities was $19.4 million, primarily consisting of salesand maturities of investments of $64.2 million and a decrease in restricted cash of $1.9 million primarilydue to a release of collateral for letters of credit servicing our leases, partially offset by purchases ofinvestments of $41.2 million, purchases of property and equipment of $4.5 million, consisting primarilyof leasehold improvements and, to a lesser extent, the purchase of computers for personnel, and $1.0million used for the acquisition of Express Service Gateway (ESG).

During 2015, cash used in investing activities was $95.3 million, primarily consisting of purchasesof investments of $106.2 million, an increase in restricted cash of $2.0 million mainly related tocollateral for letters of credit securing our leases, and purchases of property and equipment of $1.5million. These outflows were partially offset by sales and maturities of investments of $14.5 million.

During 2014, cash used in investing activities was $2.2 million, primarily consisting of purchasesof property and equipment.

Cash Flows from Financing Activities

During 2016, cash used in financing activities was $0.3 million consisting of $3.2 million in cashused for the repurchase of common stock and $1.7 million in payments of deferred offering costspartially offset by proceeds from the issuance of common stock upon exercise of stock options of $4.3million and $0.3 million of tax benefits from employee stock plans.

During 2015, cash provided by financing activities was $112.5 million consisting of net proceedsof $126.3 million from the issuance of Series G preferred stock, proceeds of $1.9 million from theissuance of common stock upon the exercise of stock options and warrants and $0.2 million of taxbenefits from employee stock plans, partially offset by $15.9 million for the repurchase of commonstock.

During 2014, cash provided by financing activities was $51.0 million consisting of net proceeds of$50.4 million from the issuance of Series F preferred stock, proceeds of $0.5 million from the issuanceof common stock upon the exercise of options and $0.1 million of tax benefits from employee stockplans.

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Off-Balance Sheet Arrangements

We have not entered into any off-balance sheet arrangements and do not have any holdings invariable interest entities.

Contractual Obligations

The following table summarizes our non-cancellable contractual obligations as of December 31,2016 (in thousands):

Payments Due by Period

Less Than1 Year

1 to 3Years

3 to 5Years

More Than5 Years Total

Operating leases . . . . . . . . . . . . . . . . . . . . . . . . . . . . $4,251 $ 7,263 $6,056 $ — $17,570Purchase obligations(1) . . . . . . . . . . . . . . . . . . . . . . . . 1,350 7,650 — — 9,000

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $5,601 $14,913 $6,056 $ — $26,570

(1) Purchase obligations represent total future minimum payments under our contract with our cloud infrastructure provider.

Quantitative and Qualitative Disclosures About Market Risk

We are exposed to financial market risks, primarily in interest rates and currency exchange ratefluctuations and to a lesser extent inflation.

Interest Rate Risk

We had cash and cash equivalents of $50.1 million, $19.8 million, and $35.1 million as ofDecember 31, 2014, 2015, and 2016, respectively. Our cash and cash equivalents are held in cashdeposits and money market funds. Due to the short-term nature of these instruments, we do notbelieve that we have any material exposure to changes in the fair value of our investment portfolio as aresult of changes in interest rates. Declines in interest rates, however, would reduce our future interestincome.

We did not have any current investments in marketable securities as of December 31, 2014. Wehad current investments in marketable securities of $57.4 million and $63.4 million as of December 31,2015 and 2016, respectively. The primary objective of our investment activities is to preserve principalwhile maximizing yields without significantly increasing risk. This objective is accomplished by makinginvestments consisting only of corporate bonds and U.S. Treasury securities. During 2014, 2015, and2016, the effect of a hypothetical 10% increase or decrease in interest rates would not have had amaterial impact on our historical consolidated financial statements for 2014, 2015, and 2016.

Foreign Currency Exchange Risk

As of December 31, 2014, 2015, and 2016, our cash and cash equivalents included $1.7 million,$3.3 million, and $6.4 million, respectively, held by our foreign subsidiaries, of which $0.5 million,$0.8 million, and $1.0 million, respectively, was denominated in Argentine pesos, $0.8 million,$2.0 million, and $2.7 million, respectively, was denominated in U.K. pounds sterling, and $0.2 million,$0.3 million, and $1.4 million was denominated in Australian dollars as of December 31, 2014, 2015,and 2016, respectively.

Our results of operations and cash flows are subject to fluctuations due to changes in foreigncurrency exchange rates. Substantially all of our revenue is generated in U.S. dollars. Our expensesare generally denominated in the currencies of the jurisdictions in which we conduct our operations,

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which are primarily in the United States and Argentina, Europe and Asia. Our results of operations andcash flows are, therefore, subject to fluctuations due to changes in foreign currency exchange ratesand may be adversely affected in the future due to changes in foreign exchange rates. The effect of ahypothetical 10% change in foreign currency exchange rates applicable to our business would nothave a material impact on our historical consolidated financial statements for 2014, 2015, and 2016. Todate, we have not engaged in any hedging strategies. As our international operations grow, we willcontinue to reassess our approach to manage our risk relating to fluctuations in currency rates.

Inflation Risk

We do not believe that inflation has had a material effect on our business, financial condition orresults of operations in 2014, 2015, and 2016, because our sales are denominated in U.S. dollars andour operating expenses that are denominated in currencies other than U.S. dollars have not beensubject to material currency inflation.

Critical Accounting Policies and Estimates

Our consolidated financial statements are prepared in accordance with generally acceptedaccounting principles in the United States, or U.S. GAAP. The preparation of these financialstatements requires our management to make estimates and assumptions that affect the reportedamounts of assets, liabilities, revenue, costs, and expenses and related disclosures. Our estimates arebased on our historical experience and on various other factors that we believe are reasonable underthe circumstances, the results of which form the basis for making judgments about the carrying valueof assets and liabilities that are not readily apparent from other sources. Actual results may differ fromthese judgments and estimates under different assumptions or conditions and any such differencesmay be material. We believe that the accounting policies discussed below are critical to understandingour historical and future performance, as these policies relate to the more significant areas involvingmanagement’s judgments and estimates.

Revenue Recognition

We recognize revenue from the following sources: (i) subscription and support revenue, which iscomprised of subscription fees from customers accessing our cloud hosted software and from term-based licenses of our software and support services; and (ii) professional services and other, whichconsists primarily of fees associated with consulting and training services related to the implementationand configuration of our platform.

On sales through our channel partners, we recognize revenue on a “sell in” basis as ourcontractual relationships with our channel partners do not depend on the sale of our products andservices to their customers and payment from the channel partner is not contingent on receivingpayment from the end customer. The contractual relationships with our channel partners do not allowreturns, rebates, or price concessions.

We recognize revenue net of sales taxes and other applicable taxes when all of the followingcriteria are met: there is persuasive evidence of an arrangement, delivery has occurred or service hasbeen performed, the fee is fixed or determinable, and collectability is probable.

When arrangements involve multiple elements that qualify as separate units of accounting, weallocate revenue to each deliverable based upon its relative selling price. The estimated selling pricefor each element is based upon the following hierarchy, in order of priority: (i) vendor-specific objectiveevidence, or VSOE, of selling price, if available; (ii) third-party evidence, or TPE, of selling price, ifVSOE of selling price is not available; or (iii) best estimate of selling price, or BESP, if neither VSOE ofselling price nor TPE of selling price is available.

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Software licenses are sold with support services and are recognized ratably over the life of thelicense or support period. Software licenses are generally offered with one-year terms. The baselicense subscription generally entitles the end user to the technology itself and post-contract customersupport consisting of a specified level of customer support, bug fixes, functionality enhancements tothe technology, and upgrades to new versions of the technologies, each on a when-and-if availablebasis, during the term of the subscription. For multiple-element arrangements that include onlysoftware licenses and software related post-contract support, and professional services, we allocateand defer revenue for each undelivered element of these arrangements based on VSOE. As we havenot yet established VSOE of fair value for our software licenses and support, we recognize revenue forthese arrangements on a ratable basis over the term of the subscription product with which it isbundled.

Professional services and other revenue is comprised of revenue earned for consulting servicesand training and is generally recognized as the services are rendered for time and material contracts oron a proportional performance basis for fixed price contracts. The majority of our professional servicescontracts are on a time and materials basis.

For multiple-element arrangements containing cloud hosted subscription and non-softwareservices, we: (i) determine whether each element constitutes a separate unit of accounting;(ii) determine the fair value of each element using the selling price hierarchy of VSOE of selling price,TPE of selling price or BESP, as applicable; and (iii) allocate the total non-contingent fee to eachseparate unit of accounting based on the relative selling price method. An element constitutes aseparate unit of accounting when the delivered item has standalone value and delivery of theundelivered element is probable and within our control. As we have been unable to establish VSOE orTPE for the elements of our arrangements, we determine BESP by considering overall pricingobjectives and market conditions. Significant pricing practices taken into consideration include ourdiscounting practices, the size and volume of our transactions, our price lists, our go-to-marketstrategy, historical standalone sales, and contract prices. As our go-to-market strategies evolve, thepricing practices may be modified in the future, which could result in changes in relative selling prices,including BESP, and therefore, the allocation of the selling price to an element. The considerationallocated to subscription and support is recognized as revenue over the contract period commencingwhen the subscription service is made available to the customer. The consideration allocated toprofessional services is recognized as revenue using the proportional performance method or asservices are delivered for time and material contracts. The total arrangement fee for a multiple elementarrangement is allocated based on the relative BESP of each element. However, since the professionalservices are generally completed prior to completion of delivery of subscription and support services,the revenue recognized for professional services in a given reporting period does not include feessubject to delivery of subscription and support services. This results in the recognition of revenue forprofessional services that is generally no greater than the contractual fees for those professionalservices.

We classify reimbursements received from customers for out-of-pocket expenses as acomponent of revenue.

Stock-based Compensation

We recognize compensation costs related to stock options granted to service providers based onthe estimated fair value of the awards on the date of grant, net of estimated forfeitures. We estimatethe grant date fair value, and the resulting stock-based compensation expense, using the Black-Scholes option-pricing model. The grant date fair value of stock-based awards is expensed on astraight-line basis over the period during which the employee is required to provide service inexchange for the award (generally the vesting period).

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We estimate the fair value of our stock-based awards using the Black-Scholes option-pricingmodel, which requires the input of highly subjective assumptions. Our assumptions are as follows:

• Expected volatility. As we have not been a public company and do not have a trading historyfor our common stock, the expected stock price volatility for our common stock is estimated bytaking the average historical price volatility for industry peers over a period equivalent to theexpected term of the stock option grants. We intend to continue to consistently apply thisprocess until a sufficient amount of historical information regarding the volatility of our owncommon stock share price becomes available.

• Risk-free interest rate. The risk-free interest rate is based on the yields of U.S. Treasurysecurities with maturities similar to the expected term of the options for each option group.

• Expected dividend yield. We have never declared or paid any cash dividends to commonstockholders and do not presently plan to pay cash dividends in the foreseeable future.Consequently, we use an expected dividend yield of zero.

• Expected term. The expected term represents the period that our stock-based awards areexpected to be outstanding. As we do not have sufficient historical experience for determiningthe expected term of the stock option awards granted, we base our expected term for awardsissued to employees or members of our board of directors on the simplified method, whichrepresents the average period from vesting to the expiration of the stock option.

In addition to the assumptions used in the Black-Scholes option-pricing model, we also estimate aforfeiture rate to calculate the stock-based compensation for our equity awards. We will continue to usejudgment in evaluating the expected volatility, expected terms, and forfeiture rates used for our stock-based compensation calculations on a prospective basis.

Historically, for all periods prior to this offering, the fair values of the shares of common stockunderlying our share-based awards were estimated on each grant date by our board of directors. Inorder to determine the fair value of our common stock underlying option grants, our board of directorsconsidered, among other things, contemporaneous valuations of our common stock prepared by anunrelated third-party valuation firm in accordance with the guidance provided by the American Instituteof Certified Public Accountants Practice Guide, Valuation of Privately-Held-Company Equity SecuritiesIssued as Compensation. Given the absence of a public trading market for our common stock, ourboard of directors exercised reasonable judgment and considered a number of objective and subjectivefactors to determine the best estimate of the fair value of our common stock at each grant date. Thesefactors included:

• the prices, rights, preferences and privileges of our convertible preferred stock relative to thecommon stock;

• our historical and expected operating and financial performance;

• current business conditions;

• the hiring of key personnel;

• our stage of development and business strategy;

• the likelihood of achieving a liquidity event for the shares of common stock underlying thesestock options, such as an initial public offering or sale of our company, in light of the then-prevailing market conditions;

• the lack of an active public market for our common and preferred stock;

• the market performance of comparable publicly traded peer companies;

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• the 2015 Common Stock Repurchase, 2016 Tender Offer and other third-party sales andrepurchases of our capital stock; and

• the U.S. and global capital market conditions.

In determining the fair value of our common stock, we estimated the enterprise value of ourbusiness primarily using the market approach and to a lesser extent, the income approach. Under theincome approach, forecast cash flows are discounted to the present value at a risk-adjusted discountrate. The valuation analyses determine discrete free cash flows over several years based on forecastfinancial information provided by our management and a terminal value for the residual period beyondthe discrete forecast, which are discounted at our estimated weighted average cost of capital toestimate our enterprise value. Under the market approach, a group of guideline publicly tradedcompanies with similar financial and operating characteristics as us is selected, and valuation multiplesbased on the guideline public companies’ financial information and market data are calculated. Basedon the observed valuation multiples, an appropriate multiple was selected to apply to our historical andforecasted revenue results. The estimated enterprise value is then allocated to the common stockusing the Option Pricing Method, or OPM, and the Probability Weighted Expected Return Method, orPWERM, or the hybrid method. The hybrid method applied the PWERM utilizing the probability of twoexit scenarios, going public or being acquired, and the OPM was used in the remaining privatescenario.

For stock awards after the completion of this offering, our board of directors intends to determinethe fair value of each share of underlying common stock based on the closing price of our commonstock as reported on the date of grant.

We recorded stock-based compensation expense of $1.4 million, $3.3 million, and $6.6 million for2014, 2015, and 2016, respectively. We expect to continue to grant stock options and other equity-based awards in the future, and to the extent that we do, our stock-based compensation expenserecognized in future periods will likely increase.

The intrinsic value of all outstanding options as of December 31, 2016 was $185.5 million basedon an assumed initial public offering price of $13.00 per share, the midpoint of the price range set forthon the cover of this prospectus.

Income Taxes

We are subject to federal, state, and local taxes in the United States as well as in other taxjurisdictions or countries in which we conduct business. Earnings from our non-U.S. activities aresubject to local country income tax and may be subject to current federal and state income tax in theUnited States.

We account for uncertain tax positions based on those positions taken or expected to be taken ina tax return. We determine if the amount of available support indicates that it is more likely than notthat the tax position will be sustained on audit, including resolution of any related appeals or litigationprocesses. We then measure the tax benefit as the largest amount that is more than 50% likely to berealized upon settlement. We adjust reserves for our uncertain tax positions due to changing facts andcircumstances. To the extent that the final outcome of these matters is different than the amountsrecorded, such differences will impact our tax provision in our Consolidated Statements of Operationsin the period in which such determination is made.

As of December 31, 2016, we had total gross deferred tax assets of approximately $58.0 million,primarily comprised of our net operating loss carryforwards. We have a full valuation allowance for net

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deferred tax assets, including net operating loss carryforwards, and tax credits related primarily toresearch and development for our operations in the United States, and we have deferred tax assets orliabilities in certain of our foreign subsidiaries, including the United Kingdom, Argentina and Australia.We will continue to assess the need for a valuation allowance on our deferred tax assets by evaluatingboth positive and negative evidence that may exist. Any adjustment to the deferred tax asset valuationallowance would be recorded in the periods in which the adjustment is determined to be required.

JOBS Act Accounting Election

We are an emerging growth company, as defined in the JOBS Act. Under the JOBS Act,emerging growth companies can delay adopting new or revised accounting standards issuedsubsequent to the enactment of the JOBS Act until such time as those standards apply to privatecompanies. We have irrevocably elected not to avail ourselves of this exemption from new or revisedaccounting standards and, therefore, will be subject to the same new or revised accounting standardsas other public companies that are not emerging growth companies.

Recently Adopted Accounting Standards

In April 2015, the FASB issued ASU 2015-05, Intangibles—Goodwill and Other Internal UseSoftware: Customer’s Accounting for Fees Paid in a Cloud Computing Arrangement, which providesguidance on determining whether a cloud computing arrangement contains a software license. If a cloudcomputing arrangement includes a software license, then the customer should account for the softwarelicense element of the arrangement consistent with the acquisition of other software licenses. If a cloudcomputing arrangement does not include a software license, the customer should account for thearrangement as a service contract. The new standard is effective for interim and annual periodsbeginning after December 15, 2015 and early adoption is permitted. We have adopted this standard as ofJanuary 1, 2016 and the impact of its adoption on our consolidated financial statements was not material.

Recently Issued Accounting Standards

In May 2014, FASB issued Accounting Standards Update, or ASU, No. 2014-09, Revenue fromContracts with Customers (Topic 606) (ASU 2014-09) which amended the existing FASB AccountingStandards Codification. This standard establishes a principle for recognizing revenue upon the transferof promised goods or services to customers, in an amount that reflects the expected considerationreceived in exchange for those goods or services. The standard also provides guidance on therecognition of costs related to obtaining and fulfilling customer contracts. ASU 2014-09 will be effectivefor fiscal years and interim reporting periods beginning after December 15, 2017. We are currently inthe process of assessing the adoption methodology, which allows the amendment to be appliedretrospectively to each prior period presented, or with the cumulative effect recognized as of the dateof initial application. We are currently evaluating the impact to our consolidated financial statements.

In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842) (ASU 2016-02), whichrequires lessees to record most leases on their balance sheets but recognize the expenses on theirincome statements in a manner similar to current practice. ASU 2016-02 states that a lessee wouldrecognize a lease liability for the obligation to make lease payments and a right-to-use asset for theright to use the underlying asset for the lease term. The new standard is effective for interim andannual periods beginning after December 15, 2018 and early adoption is permitted. We are currentlyevaluating the impact to our consolidated financial statements.

In March 2016, the FASB issued ASU 2016-09, Compensation—Stock Compensation (Topic718): Improvements to Employee Share -Based Payment Accounting, which simplifies the accountingand reporting of share-based payment transactions, including adjustments to how excess tax benefits

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and a Company’s payments for tax withholdings should be classified. The new standard is effective forannual periods beginning December 15, 2016. Early adoption is permitted for any entity in any interimor annual period for which financial statements have not been issued or made available for issuance.We have not adopted the ASU for 2016. It is not expected that the adoption will have a material effecton our consolidated financial statements.

In August 2016, the FASB issued ASU No. 2016-15, Statement of Cash Flows (Topic 230):Classification of Certain Cash Receipts and Cash Payments. ASU 2016-15 identifies how certain cashreceipts and cash payments are presented and classified in the statement of cash flows. The standardis effective for fiscal years and interim periods beginning after December 15, 2017. The standardshould be applied retrospectively and early adoption is permitted, including adoption in an interimperiod. We are currently in the process of evaluating the impact that the standard will have on ourconsolidated financial statements.

In November 2016, the FASB issued ASU No. 2016-18, Statement of Cash Flows (Topic 230):Restricted Cash. ASU 2016-18 requires that the statement of cash flows explains the change duringthe period in the total cash, cash equivalents, and restricted cash. The standard is effective for fiscalyears beginning after December 15, 2017, and interim periods within those years. This standard shouldbe applied retrospectively and early adoption is permitted, including adoption in an interim period. Weare currently in the process of evaluating the impact that the standard will have on our consolidatedfinancial statements.

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BUSINESS

Overview

Our mission is to help organizations change and innovate faster by making it easy to connect theworld’s applications, data, and devices.

We are entering a new era of business with the rise of the composable enterprise. Competitiveadvantage is no longer primarily determined by the physical assets organizations own and control, butrather by how they connect and orchestrate a multitude of physical and technology assets, employees,customers, and suppliers. In this new era, winning organizations are composable enterprises that canquickly and effectively adopt new technologies and rapidly connect these assets to drive competitiveadvantage. To become composable enterprises, organizations must redefine their technology operatingmodels by migrating from heavy and hardwired architectures to a lighter, more agile approach, usingbuilding blocks that can be rapidly connected to compose more innovative applications.

The convergence of major technology forces, such as mobile, social, SaaS, cloud, big data, andIoT, is driving the shift to composability and creating disruption across almost every industry.Organizations are investing heavily in these new technologies to create differentiated customerexperiences, new revenue channels, and entirely new business models. This is creating a massiveneed to connect these increasingly distributed new technologies. For example, a new mobile bankingapp will not only draw data from existing customer and financial systems but also from paymentsengines, location-based services, mobile security services, and dozens of other systems and datasources. Similarly, in healthcare, patient outcomes depend on real-time connectivity to patient profilesand portals, electronic medical record systems, prescription records, wearable devices, laboratorydata, and mobile wellness applications.

These new technology trends are placing unrelenting demands on a legacy technology operatingmodel that already has limited capacity to deliver new projects. IT organizations have typicallydelivered one-off custom projects built with tightly coupled point-to-point connections that are inflexible,costly, difficult to manage, and unable to be reused and adapted to ever-changing businessrequirements. As a result, technology infrastructure has become the bottleneck to transformation ratherthan the enabler.

We are enabling a fundamental shift in organizations’ technology operating models by equippingthem to create composable, agile infrastructures. Composability is a design principle that involvesassembling, combining, and orchestrating IT assets as components to create new or modifiedapplications. Our customers use our Anypoint Platform to connect their applications, data, and devicesinto an “application network” where systems are pluggable instead of glued together with customintegration code. The application network enables a self-serve infrastructure through discoverablebuilding blocks, or nodes, that can be used and reused to rapidly compose applications. With anapplication network built with Anypoint Platform, organizations can transform into composableenterprises.

Anypoint Platform enables our customers to change and innovate faster by resolving the ITbottleneck. It speeds innovation by empowering developers to experiment and prototype new solutions,and freeing IT from writing manual integrations. Our platform does not require customers to uninstall orreplace any existing IT investments. Instead, customers can connect existing investments as nodes onthe application network for continued reuse, which can dramatically increase the longevity of, andreturn on, these assets. Our flexible architecture and universal connectivity are designed to ensurethat, as new technologies are developed, organizations can easily integrate those new technologies

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into their application networks, which protects our customers from technology obsolescence andcompetitive disruption. The application network increases in value as new nodes are added. Eachnode is reusable for new services applications, resulting in network effects that drive speed and agilityand lower costs.

Anypoint Platform is a single, unified platform that includes the key technology componentsrequired for IT architects, developers, and systems administrators to easily build and rapidly scale theirapplication networks. It includes a universal connectivity model, end-to-end API lifecycle capabilities, aresilient and scalable runtime engine, enterprise-grade governance and security, and a collaborativeengagement exchange for self-serve discovery and reuse of IT assets. Anypoint Platform facilitatescontinual change and seamlessly connects and orchestrates an ever-increasing volume ofapplications, data, and devices, whether they are owned and on-premises, provided by partners, ordelivered as cloud services. Built for ease of use in a hybrid-cloud environment, our platform offers ourcustomers the same capabilities whether deployed on-premises or in the cloud.

We currently have over 1,000 customers located in over 60 countries across every majorindustry, including 30 customers with over $1.0 million in annual contract value of subscription andsupport contracts, or ACV. For multi-year subscription and support contracts, the ACV is determined bydividing the total contract value of such contracts by the number of years in the subscription period.Our customers include Citrix, The Coca-Cola Company, Dixons Carphone, McDonald’s, Office DepotEurope B.V., Salesforce, ServiceNow, Spotify, State of Colorado, Toyota Motor Corporation Australia,and Unilever, each of which accounted for at least $100,000 in subscription and support revenue in2016. Although our platform can be adopted by organizations of nearly any size, we focus our salesefforts on the largest global organizations. Our direct sales force targets CIOs, IT architects, and otherbusiness leaders, who are driving digital transformation in their organizations. We also partner with SIsand ISVs, which enhances our sales leverage by sourcing new prospects and providing systemsintegration services on implementations of our platform.

We have grown rapidly in recent periods. Our revenue for 2014, 2015, and 2016 was $57.6million, $110.3 million, and $187.7 million, respectively, representing a growth rate of 91% and 70%,respectively. We incurred net losses of $47.8 million, $65.4 million, and $49.6 million in 2014, 2015,and 2016, respectively.

Industry Background

The Rise of the Composable Enterprise

The way organizations succeed is fundamentally different than the way they achieved success ageneration ago. Organizations are no longer defined primarily by the physical assets they own andcontrol. Today, they are defined primarily by how they connect and orchestrate a multitude of physicalassets, employees, customers, suppliers, software, infrastructure, and devices. For example,manufacturers no longer achieve success on how effectively they vertically integrate to build products,but rather by connecting global partners and orchestrating the assembly of best-of-breed componentsacross global supply chains. Similarly, retailers no longer achieve success based on the reach of theirphysical stores, but rather by composing a rich multi-channel experience through the integration ofdata and campaign experiences across their customers’ purchase lifecycles.

In today’s world, organizations no longer compete primarily on how they physically build andscale, but rather on how quickly and effectively they connect applications, data, and devices tocompose their businesses. Organizations that adapt to become composable will innovate faster,consequently delivering better customer experiences and building superior products. Those that do notwill fall behind. Organizations will win or lose based on the speed at which they can compose andrecompose their businesses to serve their customers and outpace their competition.

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Increasing Demands on IT Require a New Operating Model

The convergence of major technology forces, such as mobile, social, SaaS, cloud, big data, andIoT, is driving the shift to composability. In just 15 years, the number of SaaS applications has grown toover 3,000. IDC estimates that data will grow exponentially from 4.4 zettabytes in 2013 to 44zettabytes by 2020, and Gartner estimates that the number of connected devices will grow from 4.9billion in 2015 to 20.8 billion in 2020. These trends are creating massive disruption across almost everyindustry. To capitalize on the opportunity, organizations are investing heavily to incorporate these newtechnologies to create differentiated customer experiences, new revenue channels, and entirely newbusiness models. Business leaders are placing unrelenting demands on their IT organizations, askingthem to adopt new technologies at a rapid pace and further complicating an already brittle and complexIT infrastructure.

This disruption significantly strains the legacy technology operating model, in which the ITorganization was responsible for designing, building, and delivering complete technology solutions on aproject-by-project basis. These one-off custom projects were often built with tightly coupled point-to-point connections that are inflexible, costly, difficult to manage, and unable to be reused and adaptedto ever-changing business requirements. In addition, these projects often took months or years todeliver.

With the convergence of new technology forces, the IT organization is often becoming abottleneck as it can no longer keep up with demands placed on it to deliver new projects to thebusiness. To solve this problem, the IT organization must change its focus from delivering discreteprojects to delivering self-serve, reusable building blocks that developers across the organization canleverage to rapidly compose and deliver new applications. We believe a fundamental shift to a newtechnology operating model is required to enable a composable enterprise.

APIs are a Key Enabler of the New Technology Operating Model

The modern API is a key enabler of the new technology operating model. An API makesapplication functions and data available through a standardized interface. This means that developersno longer need to learn the inner workings of the underlying IT asset to extract, utilize, and reuse dataand services from that asset. These standardized interfaces make it easier to consume data.

Google Maps is a powerful example of APIs enabling the consumption and reuse of a valuabletechnology asset. By publishing an API for its mapping service, Google has exposed mapping data thatdevelopers can access and use in their applications. Whether a ride sharing company mapping adriver’s proximity to a rider or a local business recommendation app directing consumers to thelocations of nearby businesses, any organization can now use Google maps in its new applicationswithout spending years creating their own digital maps or understanding the underlying technology.

APIs alone are insufficient to create the building blocks that power the new technology operatingmodel. These building blocks require strong connectivity to the underlying systems and applications. Inaddition, they need to be orchestrated to compose applications that perform useful business functions.As these building blocks are connected, an application network is created, which provides the basis forthe composable enterprise.

Composable Enterprises Require Application Networks

An application network connects applications, data, and devices within and between anorganization and its external ecosystems using APIs. Instead of connecting applications through point-to-point connections or isolated architectures, the application network combines the power of APIs with

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connectivity, orchestration, discoverability, and governance to form a network of self-serveprogrammable building blocks. This radically changes the technology operating model by unlockingvaluable internal and third-party IT assets to quickly build new applications. We believe that, over time,an application network will become fundamental to an organization’s core operations, much likeInternet service.

With an application network, anyone in the extended enterprise can use its building blocks toaccess data and compose new applications, which themselves then become discoverable andreusable on the network. An organization can plug a broad range of IT assets into its applicationnetwork, including internal on-premises applications; third-party services from SaaS companies suchas Salesforce and Workday and from cloud platform companies such as AWS; and a myriad ofdevices. Once connected, these assets become nodes on the application network that can beintegrated with other nodes to compose new applications. Each new node added to the applicationnetwork will increase the value of the network, since the data and capabilities of that node arediscoverable and consumable by any developer with access to the network. Each new dollar spent onIT becomes a dollar invested in a reusable asset, not a sunk IT cost.

Limitations of Traditional Approaches

Historically, organizations have relied on four primary approaches to address the varioustechnology integration challenges they faced. These approaches were not designed to build applicationnetworks, nor can they evolve to address today’s challenges. The existing approaches include:

• Manual and custom-coded project-based integrations. The oldest and still most pervasiveapproach is to custom-code integrations on a project-by-project basis. While this initially maybe the path of least resistance, the aggregation of many custom-coded integrations eventuallyresults in a brittle tangle of code, commonly referred to as “spaghetti code.” This becomesexceptionally expensive and time consuming to maintain and change, as swapping onecomponent may initiate a cascade of unintended consequences. The result is that developersare forced to spend a large amount of their time duplicating integration work, rather thaninnovating. The morass of custom code also inhibits governance, management and visibilityinto data flows, making it difficult to monitor and secure.

• Legacy software integration products. Legacy software integration products were built toprovide an IT-centric integration hub to connect an organization’s on-premises IT assets. Withthe exponential growth of new technologies, such as SaaS applications, microservices and IoTdevices, organizations may need to integrate tens of thousands of assets, both on-premisesand in the cloud. These monolithic integration hubs have failed to adapt to rapidly changingtechnologies, which are largely cloud-based.

• Point-to-point SaaS integration products. This class of integration products offersdevelopers graphical tools and pre-built connectors to integrate SaaS applications. While thisapproach can enable rapid and lower-cost integrations for simple scenarios, it results in point-to-point connections and siloed project-by-project integrations that are uncoordinated and notreusable or pluggable into other assets or a network of assets. Over time, these products addcomplexity and lack centralized visibility and governance.

• API management products. These products focus narrowly on managing, securing, andanalyzing traffic to APIs. They do not include connectivity or orchestration capabilities, whichleaves fundamental gaps in the implementation of new APIs and composition of APIs to formapplication networks.

These approaches were mostly designed to address the problems of the legacy technologyoperating model and are slow, expensive, brittle, not reusable, and siloed. None of these approaches

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fully address the speed, flexibility, reusability, and composability required for an organization tobecome a composable enterprise.

Our Opportunity

We estimate our current market opportunity to be $29 billion. We calculate our market opportunityby identifying the number of companies worldwide across all industries that have at least $50 million ofannual revenue based on certain independent industry data from the S&P CapIQ database. We thensegment these companies into three separate cohorts based on the amount of their annual revenue:companies that have annual revenue greater than $2.5 billion, companies that have annual revenuebetween $150 million and $2.5 billion, and companies that have annual revenue between $50 millionand $150 million. We then multiply the number of companies worldwide in each cohort by our averageACV per cohort.

Our average ACV per cohort is defined as the average, by cohort, of our ACV for 2016 from thosecustomers that (i) were customers as of December 31, 2016, (ii) were included in the independentindustry data, and (iii) generated greater than $50,000 of ACV.

We are disrupting large, existing markets. Forrester estimates that $32 billion will be spent in2017 on the integration software market. Separately, Forrester estimates an additional $394 billion willbe spent in 2017 on systems integration project work, which does not include the spending on custom-coded integrations by internal development teams. As the market for application networks continues todevelop, we believe there is an opportunity to convert a meaningful portion of this spend to a software-based approach.

Our Solution: Anypoint Platform

We enable our customers to change and innovate faster by making it easy for them to connecttheir applications, data, and devices into application networks. Anypoint Platform powers ourcustomers’ application networks and allows them to transform into composable enterprises so they caninnovate faster, deliver differentiated customer experiences, build superior products, and execute theirdigital strategies.

Anypoint Platform is a single, unified platform that includes the key technology componentsrequired for IT architects, developers and systems administrators to easily build and rapidly scale theirapplication networks. It includes a universal connectivity model, end-to-end API lifecycle capabilities, aresilient and scalable runtime engine, enterprise-grade governance and security, and a collaborativeengagement exchange for self-service discovery and reuse of IT assets.

Unlike traditional approaches, Anypoint Platform was architected to seamlessly connect andorchestrate an ever-increasing volume of applications, data, and devices, whether they are owned andon-premises, provided by partners, or delivered as cloud services. Built for ease of use in a hybrid-cloud environment, our platform offers our customers the same capabilities whether deployed on-premises or in the cloud.

Each of our customers takes a different journey to build an application network with AnypointPlatform. For example, a large organization may begin with a single integration project, such ascomposing a customer profile web app for its sales team to better engage with its customers. This appwould require real-time data feeds from various back-end applications, including order data from an on-premises eCommerce system, billing data from an enterprise resource planning system such as SAP,

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and customer data from a cloud sales automation system such as Salesforce. With Anypoint Platform,our customers expose this data as discoverable and consumable APIs that are managed, controlled,and secured. Our customers can then use Anypoint Platform to combine those APIs to compose a“single view of the customer.” This single view itself can then become a consumable API. All four ofthese APIs are now discoverable and self-serve building blocks that are accessible as nodes on anascent application network.

Next, the same organization may want to build a new product recommendation mobile app thatrequires the same order, billing, and customer data. In this case, the mobile app developer can useAnypoint Platform to discover and reuse the previously built single view of the customer API, as shenow has access to all of that rich information without having to requisition and wait for the ITorganization, understand the underlying systems, or write a single line of code. The developer canfocus her energy on adding value to the app by exposing new APIs, such as an API for product catalogdata and an API for web clickstream data, such as from Adobe, that tracks customer interest andintent. She can then combine these new APIs with the previously-created single view of a customerAPI to compose the new product recommendation mobile app. By having the existing APIs availableon the application network, the barriers to creating a new app and the time to realizing value aredramatically reduced.

As more applications are built and added, the application network expands organically, increasingan organization’s delivery speed. Every incremental project builds on what has been built before.Organizations can add a multitude of nodes to the network, connecting and orchestrating on-premisessystems, SaaS and cloud applications, and APIs from third-parties, such as those for communications,

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payments, mapping, and supply chain. The IT organization maintains visibility and control of theapplication network even as the network continues to expand and becomes increasingly distributed.This allows the IT organization to monitor and optimize performance.

Applications that are plugged into the network are now accessible and reusable by any developerwith access to the network. The organization can more easily change any app or system, such asupgrading its ERP solution or onboarding new shipping and fulfillment vendors, without impacting otherapplications running on the application network. In this way, the organization becomes more agile as itcan swap, recycle, and recompose IT assets without breaking the network or any existing applicationsand nodes.

The result is a composable enterprise that empowers the business to focus on innovation andrespond to customer needs and competitive challenges.

Anypoint Platform combines five technology elements that are critical for building an applicationnetwork:

• End-to-End API Lifecycle Capabilities. Modern APIs must be built as products anddesigned for broad consumption by a diverse audience of developers and IT professionals.Anypoint Platform supports the full API product lifecycle, including the design, implementation,deployment, management, versioning, and retirement of APIs. Furthermore, Anypoint Platformtakes a “design-first” approach to the API lifecycle, enabling elegant API design thatsignificantly improves consumption, driving more reuse of those APIs and acceleratinginnovation.

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• Universal Connectivity Model. APIs are only as valuable as the data that feeds them. In thetypical enterprise, data comes from an increasing number of sources, such as on-premisesapplications, SaaS and cloud applications, custom data stores, devices, and external third-parties, such as partners, vendors, and customers. Anypoint Platform has a universalconnectivity model that allows customers to easily connect and extract all types of data fromany source, over any protocol. Anypoint Platform includes a library of more than 120 out-of-the-box connectors to easily connect existing applications and protocols. For any protocol where anout-of-the-box connector does not exist, Anypoint Platform can accommodate a customconnector built using software code that can connect that data to the rest of the applicationnetwork.

• Resilient and Scalable Runtime Engine. Application network nodes are designed to bereused many times across multiple applications. As a result, the uptime, availability, andperformance of these nodes are paramount. At the core of Anypoint Platform is a scalable,high-performing, and resilient engine that runs the application network nodes and orchestratesthe information flows across the application network. The runtime engine was built for hybridenvironments, allowing nodes to be deployed flexibly on-premises or in the cloud.

• Enterprise-Grade Governance and Security. IT assets need to be available across anapplication network in a well-governed highly secure infrastructure. Application network nodesbuilt using Anypoint Platform are automatically registered when they are deployed onto thenetwork, giving the IT organization full visibility into its application network, includingperformance and uptime, as well as control, such as access management and capacitychanges. In addition, because access to any given system is through standardized, managedAPIs, rather than through a myriad of custom-developed access points, the network can bemore easily secured.

• Collaborative Engagement Exchange. The discovery and consumption of technologyassets by developers within the organization is a central tenet of the new technology operatingmodel. Anypoint Platform includes a collaborative engagement exchange that makes it simpleto publish and discover APIs, connectors, integration templates, and other assets for easyconsumption and reuse.

Benefits of Our Solution

Our platform helps our customers build application networks to become composable enterprisesand achieve a new technology operating model. With our platform, customers can:

Increase Business Agility

Our platform enables our customers to increase the speed at which they innovate and operate.With Anypoint Platform, customers can create an agile organization where IT assets can be swapped,recycled, composed, and recomposed without breaking the application network or any of its existingapplications and nodes. As more applications are built and more nodes added, each additionalapplication becomes easier and faster to build. As a result, organizations are able to rapidly adapt tonew technologies and shifting customer demands, develop new business models, and respond tocompetitive threats.

Increase Innovation

Our platform allows our customers to innovate continuously by changing their operating modelfrom sole reliance on a centralized IT organization to self-serve innovation by developers across thebusiness. This approach reduces the time developers and IT personnel need to spend manually

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integrating IT assets, freeing them to spend time innovating by experimenting and prototyping newsolutions quickly.

Extend the Useful Life of IT Investments

Our customers can use our platform to dramatically increase the longevity of and return on newand legacy IT assets, turning IT costs into reusable, longer-term investments. Anypoint Platform doesnot require customers to uninstall or replace any existing IT investments. Instead, organizations canadd them to their application network in which their data is exposed and discoverable. Organizationscan then leverage the valuable data and business logic in these assets more broadly and across awider array of applications.

Future-Proof the Enterprise

With our platform, customers can more easily capitalize on new innovations such as containertechnology, microservices, IoT, and hybrid cloud, without requiring them to replace, rebuild, or re-platform. As customers move to the cloud and deploy their applications on cloud platforms such asAWS, both the application network and its nodes and endpoints can flexibly span across environmentsincluding on-premises datacenters, cloud environments, and third-party SaaS applications.

In addition, organizations that build an application network on our platform are more readilyequipped to adapt to new technologies and applications. For example, customers are increasinglyexperimenting with smarter applications that incorporate artificial intelligence, or AI. Rather than everyorganization building its own AI solutions, our customers are able to access third-party best-of-breed AIfunctionality as nodes on their application network to rapidly compose new intelligent applications.

Accelerate Business Value through Network Effects

Our customers’ application networks can dramatically increase in value as additional nodes areadded to the network. An application network can be as simple as two nodes that enable two on-premises applications to share information or as broad as thousands of nodes spanning a globalextended enterprise of on-premises and cloud-based applications, data, and devices. Importantly, eachnew node added to the application network will increase the value of the network since the data andcapabilities of that node are made discoverable and consumable by any developer with access to thenetwork. Each node is reusable for new services and applications, resulting in network effects thatdrive speed, agility, and lower cost.

Our Customers

We currently have over 1,000 customers located in over 60 countries across every majorindustry, including 30 customers with over $1.0 million in ACV. No single customer represented morethan 10% of our revenue for 2014, 2015, and 2016. Our platform has been adopted across manyvertical markets, including education, financial services, healthcare, retail and consumer goods, thepublic sector, and technology. For example, based on market capitalization as set forth in independentindustry data, our customers include:

• five of the top 10 global banks;

• three of the top 10 global auto companies;

• four of the top 10 global consumer packaged goods companies;

• three of the top 10 global healthcare sector companies; and

• six of the 10 largest U.S. federal agencies.

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Case Studies

We believe that the following case studies are representative examples of how our customershave benefitted from our platform.

McDonald’s

Customer since 2015

McDonald’s is one of the world’s largest restaurant chains with approximately 36,000 locations in119 countries. As McDonald’s continues their evolution to become a modern and progressive burgercompany, it is implementing a digital transformation of its global business to deepen customerengagement, improve customer experience, and attract new, young, and repeat customers.

McDonald’s is currently building an application network utilizing the Anypoint Platform, replacing anumber of disparate API management and legacy software integration products. McDonald’sapplication network connects its proprietary e-commerce systems and other back-end databases tocreate a set of reusable APIs for orders, nutrition, customer, location, and offers. These APIs can beused to rapidly compose customer-facing applications for mobile, social, web, and restaurant-basedkiosks. For example, using Anypoint Platform, McDonald’s enabled its mobile app to enhance thecustomer’s experience by offering location-based alerts with promotional offers, menu information, anda restaurant locator.

With Anypoint Platform, McDonald’s is realizing internal IT efficiencies by reusing applicationsand APIs, which allows it to drive new digital project initiatives faster than they did before.

Unilever

Customer since 2014

Unilever is one of the largest consumer packaged goods companies in the world, with a presencein 190 countries and 2 billion consumers using their products every day. In recent years, Unileversought to develop a new set of business and technology capabilities that would support businessgrowth and improved business performance. To accomplish this, IT needed to shift to a new operatingmodel that can deliver projects quickly, without teams duplicating work and creating unmanageablecustom code.

Partnering with MuleSoft, Unilever developed reusable APIs that underpin core businessprocesses and connect various applications and multiple digital asset management systems. Unileverteams self-serve reusable and composable APIs to access valuable data more easily than before tobuild directly to consumer applications. Unilever is delivering on the vision of a new IT operating modelwith Anypoint Platform, enabling the entire organization to achieve self-reliance in project delivery.

As a result, Unilever is able to unlock improved growth and business value.

Bank of America

Customer since 2013

Bank of America has global technology operations with thousands of application integrations builtusing a variety of custom code and tools. As the bank’s IT environment has continued to grow, it hasbecome complex and expensive to maintain, creating a need to standardize new and existingintegrations. Bank of America required a solution to address its application integration needs anddeliver IT at the speed and scale it needed across the organization.

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In 2014, Bank of America deployed its first MuleSoft solution to support its efforts to build anapplication network connecting across multiple lines of business through reusable API assets.MuleSoft helped the bank simplify its IT footprint, enable federated development teams, shortendevelopment cycles, and streamline management of integrations across the bank.

Salesforce

Customer since 2013

Salesforce is a leading provider of enterprise cloud computing solutions with a focus on customerrelationship management, or CRM. Salesforce IT identified an opportunity to increase operationalefficiency by enabling a new IT operating model, in which IT would package up data assets asreusable services and enable self-service for anyone in the company, which reduced dependencies onthe IT project teams.

With MuleSoft, Salesforce opened up access to its systems with integration services, providingsecure access to those services across the company. For example, Salesforce has streamlined itsemployee lifecycle management from hire to retire via a single integration service, which providesemployee records in a canonical form by connecting data from Workday, Concur, and Sierraview withAnypoint Platform. By democratizing access to core systems data in a secure manner, Salesforce isaccelerating project delivery time and providing faster and better services to employees.

ServiceNow

Customer since 2015

ServiceNow is a cloud computing company addressing service management for departmentsacross the enterprise. ServiceNow has grown rapidly in recent years, driving growth at scale internallyby scaling headcount and externally by continuing ServiceNow’s evolution from an application to aplatform company. ServiceNow’s leadership team saw technology as a critical enabler of this growth,identifying automation of internal processes, for example, employee on-boarding and increasing fieldsales productivity, as initiatives of strategic importance. These initiatives reflected a broader increase indemand on the IT function, with the number of projects that IT was asked to deliver and IT costsincreasing year over year.

ServiceNow saw that existing approaches to IT were neither sufficient nor sustainable.ServiceNow selected MuleSoft to build an application network that connects its internal and customer-facing applications (financials, MDM, HR, etc.) managed by ServiceNow IT and its homegrown CRMsystem based on their own ServiceNow instance. With MuleSoft, data now flows seamlessly acrosssystems. For example, ServiceNow leveraged MuleSoft’s platform to implement system APIs tofacilitate a master data management (MDM) initiative. The system APIs from MuleSoft enable dataflowing in real-time from MDM, SAP, and a homegrown CRM system based on their own ServiceNowinstance. These system APIs can be reused in the future across different connectivity use casesassociated to the key systems, thereby enabling a reduction in ongoing development and maintenancecosts.

Spotify

Customer since 2015

Spotify is the world’s most popular digital music streaming service with over 100 million activeusers in 60 countries. As the company grew and introduced its service into new markets, Spotifyrealized that improving internal connectivity would benefit business processes and create a more agile

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and responsive organization. With Anypoint Platform, Spotify is rolling out an application network anddeploying microservices to streamline the integration of existing systems such as data warehouseswith company ERP infrastructure layers.

Dixons Carphone

Customer since 2014

Dixons Carphone is Europe’s leading electronics and telecommunications retailer with over2,300 locations across nine countries. Facing competition from pure-play e-commerce vendors, DixonsCarphone sought to differentiate itself by rolling out a unique in-store experience through a digital salesplatform. It needed to drive consistent sales execution globally and gain deeper insight into salesassociates’ performance.

Using MuleSoft’s Anypoint Platform, Dixons Carphone developed honeyBee, a digital platform tohelp the customer navigate through a consistent journey alongside a sales associate, from exploringdifferent purchasing options and comparing products, to receiving a recommendation based on theirstated preferences. Today, when a customer meets with a Dixons Carphone associate in the store,they can learn about the exact solutions and products that will meet their specific needs right in thatinteraction. Dixons Carphone associates carry a tablet which helps them in their discussion during thecustomer’s buying journey. For example, the associate can now describe, in great detail, the plansfrom various mobile service providers for any mobile device in the store to match the specific needs ofthe particular customer. The platform also provides real-time journey analytics which Dixons Carphoneuses to improve sales conversion, resulting in an increase in in-store sales.

To effectively scale the system globally, Dixons Carphone built reusable API assets to beleveraged across the organization. Dixons Carphone is able to launch applications significantly faster.For example, rather than building country-specific implementations, the honeyBee platform uses thesame set of integration logic to activate a new customer’s cell phone wherever they may be, with localcustomizations only as needed.

Our Growth Strategies

We intend to pursue the following growth strategies:

Extend Our Technology Leadership

We have a strong history of innovation. We intend to continue to invest in our platform and newfeatures and technologies that drive more robust developer engagement, increase consumption andreuse of IT assets, and extend the reach of Anypoint Platform. We also intend to invest in technologyareas that leverage the strategic position of the application network to expand our market opportunity.For example, we are making substantial investments in analytics and API security.

Drive New Customer Acquisition

We currently have over 1,000 customers, which we believe represents only a fraction of our totaladdressable customer base. We have expanded our platform to address a broader range of use cases,which has enabled us to become a more strategic partner to our customers. Consequently, theaverage ACV with new customers has increased from approximately $77,000 in 2014 to $117,000 in2015 to $169,000 in 2016. We plan to continue to invest in research and development, and sales andmarketing to grow our customer base.

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Expand Existing Customer Relationships

Our platform approach creates a sustainable land and expand business model. Over time ourcustomers expand the use of our platform in two ways. First, they deploy additional capacity as theusage of applications built on our platform increases. Second, as they address additional use caseswith their application network, their usage of our platform further increases. Our customers’ expandeduse of our platform is evidenced by our high dollar-based net retention rate.

Cultivate Our Developer Community

We have attracted a growing community of over 175,000 developers. We believe that ourengagement of developers increases our brand awareness and helps us target new customeropportunities. Our developer community is passionate about the capabilities of our platform to deliverthe benefits of the application network, leading them to recommend our platform to others within theirorganizations and outside their organizations. We have critical mass and traction within the developercommunity, and we plan to expand our developer relations function to continue to cultivate ourdeveloper community.

Extend Our Partner Ecosystem

We have an extensive partner ecosystem of SIs and VARs. Our partner ecosystem provides uswith significant synergies including lead generation, new customer acquisition, accelerateddeployment, and customer support. We intend to continue to develop and enhance these relationshipsto expand our market presence and drive channel leverage, and we expect to invest in new distributionchannels and technology partners to continue to expand our distribution footprint.

Continue to Expand Internationally

Our platform addresses customer pain points that lack geographic borders. We have madesubstantial investments in building our global sales and marketing, service delivery, and customersupport capabilities. In 2016, 38% of our revenue was generated outside of the United States, and weintend to continue to drive adoption of our platform globally.

Our Technology

We architected Anypoint Platform around a software design principle we have championed called“declarative modularity.” In this approach, components, or modules, of the system are built withcontract-based interfaces, where interaction with the modules follows prescribed rules and outputsfrom that module carrying predictable properties and outcomes. Each module is built by declaring asingle well-defined goal rather than being built as a programming construct that carries out a specificseries of steps. In this approach, complex problems are broken down into simpler modules that areloosely coupled, which optimizes for change rather than just solving the original problem. Declarativemodularity maintains the overall simplicity of the system even as the use cases become more complexover time, and the modules themselves can evolve without central coordination, driven by teamsworking independently. As long as the interfaces follow declaratively modular principles, changes toany of the modules will still yield predictable results based on the intent of each component.

The core integration engine of Anypoint Platform was built with a declaratively modulararchitecture, reducing the complex problem of integration to a small number of standardized buildingblocks that can be combined and orchestrated to solve any integration use case. Furthermore,declarative modularity allows our customers to deploy multiple integration use cases as a distributednetwork of containers rather than as a single complex hub. This results in a highly performant,massively scalable, yet easily managed architecture.

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The declaratively modular architecture of the core engine allows the surrounding tools andmodules to be loosely coupled as well, and therefore, they can be updated or changed withoutimpacting or redesigning any of the other modules. As a result, we have been able to confidently drivemultiple innovations on Anypoint Platform in parallel without fear of interference across the modulesand their development teams. For example, declarative modularity has enabled us to decouple thecore runtime engine, management, and design from infrastructural modules. This has allowed us toadapt the platform to run flexibly in on-premises datacenters, virtualized and private-cloudenvironments, multiple public clouds, and hybrid environments. It is also the basis of our universalconnectivity model: connectivity to a new application or protocol simply means creating a module that“speaks the right language” and plugging it into the platform. Finally, the declarative modularity of thecore runtime engine has enabled us to continually improve the surrounding developer tooling, makethe user experience ever easier and more powerful over time, including two-way graphical editing, anew domain-specific language, or DSL, for data integration called DataWeave, and seamlessintegration with popular third-party development tools such as Eclipse, Maven, and Jenkins.

With declarative modularity, we are able to continually evolve our platform to deliver increasingvalue to our customers. We believe this design principal provides us with a competitive advantage andenables us to innovate faster than our competitors.

Key modules of Anypoint Platform include:

Runtime services

Multi-modal deployment

Mule runtime engine

Anypoint Exchange

AnypointManagement

Center

AnypointDesignCenter

Connectors Templates APIs

Traditional datacenterPrivate cloudPublic cloud

Anypoint Design Center

Anypoint Design Center provides intuitive, low-friction development tools that make it easy todesign and test APIs, implement integration flows, and build connectors. The following are the corecomponents of Anypoint Design Center:

• Anypoint API Designer enables developers to create and share API designs by leveraging thewidely used RESTful API Modeling Language, or RAML, which optimizes for ease ofconsumption. Anypoint API Designer’s features allow API developers and prospectiveconsumers to iterate and improve the API design without having to implement the API.

• Anypoint Studio is a unified graphical design environment with a user-friendly drag-and-dropinterface for implementing and composing the API building blocks for the application network. It

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features two-way graphical to XML configuration, visual debugging capabilities, and integrationwith the most popular open source development tools (e.g., Eclipse, Maven, Ant, SVN, Git,Jenkins). Anypoint Studio includes:

• DataWeave, a simple, powerful tool to query and transform a wide variety of data formats(e.g., JSON, EDI, XML, COBOL Copybook). With DataWeave, users can do real-timeintegration, batch tasks such as data ingestion or synchronization, and filter, aggregate, andsort data to manage big data use cases.

• DataSense, a capability that aids in the discovery of the metadata of third-party APIs tosimplify data integration of those applications.

• APIKit, a toolkit that facilitates API implementation using the RAML and WSDL programmingstandards.

• MUnit, our application testing framework that provides support to unit and integration testingon API building blocks.

• Connector DevKit is a software development kit with code templates and automaticallygenerated test cases that enables users to build and package their own reusable connectorsfor any applications that do not already have Anypoint Connectors available out of the box.

Anypoint Management Center

Anypoint Management Center provides a set of management capabilities accessible through asingle interface, with real-time visibility into and control over API building blocks on the applicationnetwork. The following are the core components of the Management Center:

• Anypoint Runtime Manager provides a single interface for managing and monitoringdeployments in the cloud, on-premises, or in hybrid environments. With Runtime Manager,users can deploy applications, upgrade to new versions of those applications, group serversinto clusters, view performance metrics across environments, and connect to third partymonitoring and operations tools already in use by the customer.

• Anypoint API Manager provides a single interface to manage API users, monitor API traffic,and secure APIs by provisioning access and enforcing policies. Users can manage existingAPIs or new APIs that are developed on Anypoint Platform.

• Anypoint Analytics enables users to track key metrics on API usage, traffic volume andperformance across the application network, as well as gain visibility into business transactionsflowing across the network. Armed with this insight, customers can understand usage patterns,improve application network performance, and continually improve the quality of the nodesthemselves.

Anypoint Exchange

Anypoint Exchange is the engagement and collaboration exchange for developers both withinand outside the enterprise and serves as the primary place for discovery and reuse of API-enabled ITassets. It houses the complete listing of connectors, templates, examples, and APIs available to usersof the platform, as well as internal collaboration artifacts such as connectivity assets, documentationand ideas. Users can collaborate on Anypoint Exchange to provide feedback and drive continualimprovement of the nodes, as well as contribute new assets to the application network for furtherreuse.

Mule Runtime Engine

Mule is the runtime engine at the core of Anypoint Platform, combining real-time applicationintegration and orchestration with robust data integration capabilities, both real-time and batch. Mule

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can be deployed as an on-premises integration engine, hybrid iPaaS, or API gateway. It is light enoughto run on a laptop, but scales to support millions of transactions across an organization’s applicationnetwork.

Anypoint Connectors

As part of Anypoint Platform’s universal connectivity model, Anypoint Connectors provide acatalog of more than 120 pre-built and packaged connectors to easily connect existing applications andprotocols. In addition, Anypoint Platform’s universal connectivity model provides quick connectivity toalmost anything, including thousands of APIs as well as other protocols and all types of data formats.Developers can also build their own connectors using the connector DevKit, as well as use connectorsthat have been built and shared by other developers.

Runtime Services

We provide a range of platform services to speed, scale, and secure Anypoint Platform:

• Anypoint MQ is the cloud-based multi-tenant messaging service for Anypoint Platform. Itperforms advanced asynchronous messaging scenarios such as queueing and publish-subscribe as a hosted and managed cloud service.

• Anypoint Fabric is designed to provide application uptime and zero message loss forintegrations and APIs, whether on-premises or in the cloud. An in-memory data grid enablessharing of workloads between application instances while maintaining the state of information,as well as allowing for vertical or horizontal scalability.

• Anypoint Enterprise Security blocks unauthorized access to systems, prevents exposure ofsensitive data, and prevents attacks through proactive threat management and integration.Organizations can restrict data access based on client IP addresses through simple drag-and-drop interfaces to apply policies and filters. Access credentials, confidential messages, anddata can be encrypted and protected with digital signatures. Our platform utilizes federatedidentity to protect access to APIs and endpoints.

• Anypoint Virtual Private Cloud securely connects corporate data centers and on-premisesapplications to the cloud as though they were all part of a single private network. Networks canbe secured at the hardware or software levels with industry-standard encryption procedures.Organizations can create tiered security levels within the cloud, create a secure connectionbetween data centers and the cloud via a virtual private cloud gateway, and create secureconnections with other clouds and cloud services.

Multi-Modal Deployment

Anypoint Platform was built with the hybrid cloud in mind. Our platform includes multi-modaldeployment capabilities, enabling our customers to flexibly deploy nodes on-premises, in our publiccloud, in their own cloud, or in some combination. For customers who opt to leverage the public cloudoption, CloudHub is the platform-as-a-service, or PaaS, component of Anypoint Platform, providing amanaged, multi-tenant, globally available, and secure cloud platform for integration. With CloudHub,customers have no hardware to acquire, operate, or manage, and we manage operations andmaintenance. As our customers’ cloud strategies evolve, their application networks built on AnypointPlatform can evolve with them without needing to rewrite their existing applications.

Competition

We believe that we are the pioneer in the market for application networks because we provide theonly complete offering for building application networks. However, there are many other companies

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addressing various aspects of this market. As a result, the competitive landscape is fragmented andevolving. We compete against in-house or custom development efforts and a variety of legacyintegration software vendors, such as IBM, Oracle, and TIBCO. We also compete with smallerspecialized companies, such as Apigee, which was acquired by Google. Larger and more establishedcompanies may offer integration and API solutions that directly compete with us. Smaller companiescould also launch competing or new products and services.

We believe the principal competitive factors in our market are:

• product features and functionality;

• ease of deployment and use;

• deployment options and flexibility;

• professional services and customer support;

• brand awareness and reputation;

• total cost of ownership;

• global reach; and

• capability for customization, configurability, integration, security, scalability, and reliability.

We believe we compete favorably on the basis of the above factors. Some of our competitorshave advantages over us, such as greater financial, technical, marketing, research and development orother resources, stronger brand and business user recognition, larger installed customer bases, largerintellectual property portfolios, and broader global distribution and presence.

Geographic Information

For a description of our revenue and long-lived assets by geographic location, see Note 9 of thenotes to our consolidated financial statements included elsewhere in this prospectus.

Employees

As of December 31, 2016, we had a total of 841 employees. None of our employees arerepresented by a labor union or covered by a collective bargaining agreement. We believe we have agood relationship with our employees and are proud to have been recognized among Glassdoor’s2015 Employees’ Choice Awards for Best Small and Medium Companies to Work For, and as one ofthe Bay Area News Group’s Top Workplaces for three consecutive years.

Facilities

Our corporate headquarters occupy approximately 41,500 square feet in San Francisco,California under a lease that expires in August 2021. As of December 31, 2016, we also lease officesfor sales and marketing in the following U.S. cities: Alpharetta (GA), Chicago (IL), New York (NY), andVienna (VA). Additionally we lease international offices for sales and marketing in the followinglocations: Hong Kong, London, the Netherlands, Singapore, Sweden, and Sydney. We havedevelopment centers in Buenos Aires, Chicago (IL), and San Francisco (CA). While we believe ourfacilities are sufficient and suitable for the operations of our business today, we are closely monitoringthe need to add new facilities and grow our existing facilities as we add employees and expand intoadditional markets.

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Regulatory Environment

We are subject to a number of U.S. federal and state and foreign laws and regulations thatinvolve matters central to our business. These laws and regulations may involve privacy, dataprotection, intellectual property, competition, consumer protection, export control, taxation or othersubjects. Many of the laws and regulations to which we are subject are still evolving and being testedin courts and could be interpreted in ways that could harm our business. In addition, the applicationand interpretation of these laws and regulations often are uncertain, particularly in the new and rapidlyevolving industry in which we operate. Because global laws and regulations have continued to developand evolve rapidly, it is possible that we may not be, or may not have been, compliant with each suchapplicable law or regulation.

Legal Proceedings

From time to time, we may become involved in legal proceedings arising in the ordinary course ofour business. We are not presently a party to any legal proceedings that, if determined adversely to us,would individually or taken together would reasonably be expected to have a material adverse effect onour business, results of operations, financial condition or cash flows.

Sales & Marketing

Our go-to-market approach is driven by the strength and innovation of Anypoint Platform, as wellas user demand. We offer Anypoint Platform on a subscription basis. The breadth of our platformallows us to market to every level of an organization. We can engage developers on day-to-dayfrustrations and the CIO on large, strategic transformations. Anypoint Platform can be used for stand-alone integration projects and for large, transformative efforts. Even where customers engage us forsmaller projects, they typically grow their usage of our platform for their existing use cases, expand touse additional elements of our platform, and apply them to new use cases. We support that process byproactively guiding our customers to realize other use cases that are more strategic and transformativein nature than the initial proposed use case. Our platform has natural network effects that help itspread through word-of-mouth across teams and departments.

Our marketing efforts focus on driving customer success, generating broader awareness, andcultivating our developer community and partner ecosystem of SIs and VARs, which are important leadgeneration channels for us. We invest in brand and product promotion and demand generation throughdirect marketing and advertising. We also leverage insights gathered from our customers and partnersto improve our targeting and ultimately the return-on-investment from our marketing activities.

As of December 31, 2016, we had 401 employees in our sales and marketing organizations.

Research & Development

We have a proven research and development culture that rapidly and consistently delivers high-quality products. Our research and development organization is primarily responsible for design,development, testing, and delivery of our products and platform.

As a company, we invest substantial resources in research and development to drive coretechnology innovation and bring new products to market. As of December 31, 2016, we had 177employees involved in research and development activities, including 106 employees in Argentina.

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Intellectual Property

Our success depends in part upon our ability to protect our core technology and intellectualproperty. To accomplish this, we rely on a combination of intellectual property rights, including patents,trade secrets, copyrights and trademarks, as well as customary contractual protections.

As of December 31, 2016, in the United States, we had one issued patent, which expires in 2034,and had three patent applications pending. In addition, we have registered “MuleSoft” as a trademarkin the United States, Argentina, Canada, Hong Kong, Australia, New Zealand, Singapore, and theEuropean Union. We cannot assure you that any of our patent applications will result in the issuance ofa patent or whether the examination process will require us to narrow our claims. Furthermore, even ifa patent issues, we cannot assure you that such patent will be adequate to protect our business. Wealso license software from third parties for integration into our solutions, including open sourcesoftware and other software available on commercially reasonable terms.

We control access to and use of our proprietary technology and other confidential informationthrough the use of internal and external controls, including contractual protections with employees,contractors, customers and partners, and our software is protected by U.S. and international copyrightlaws. Despite our efforts to protect our technology and proprietary rights through intellectual propertyrights, licenses and confidentiality agreements, unauthorized parties may still copy or otherwise obtainand use our software and other technology. In addition, we intend to expand our internationaloperations, and effective patent, copyright, trademark, and trade secret protection may not be availableor may be limited in foreign countries.

Our industry is characterized by the existence of a large number of patents and claims andrelated litigation regarding patent and other intellectual property rights. In particular, leading companiesin our markets have extensive patent portfolios and are regularly involved in litigation. From time totime, third parties, including certain of these leading companies, may assert patent, copyright, tradesecret, and other intellectual property rights against us, our channel partners or our customers. Ourstandard license and other agreements may obligate us to indemnify our channel partners andcustomers against such claims. Successful claims of infringement by a third party could prevent usfrom continuing to offer our solution or performing certain services, require us to expend time andmoney to develop non-infringing solutions, or force us to pay substantial damages, including trebledamages if we are found to have willfully infringed patents or copyrights, royalties or other fees.Competitors may also be more likely to claim that our solutions infringe their proprietary rights andseek an injunction against us from continuing to offer our platform. We cannot assure you that we donot currently infringe, or that we will not in the future infringe, upon any third-party patents or otherproprietary rights.

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MANAGEMENT

Executive Officers and Directors

The following table provides information regarding our executive officers and directors as ofDecember 31, 2016:

Name Age Position

Executive Officers:Greg Schott . . . . . . . . . . . . . . . . . . 52 Chairman and Chief Executive OfficerMark Dao . . . . . . . . . . . . . . . . . . . . 44 Chief Product OfficerRob Horton . . . . . . . . . . . . . . . . . . 45 Senior Vice President, People Ops, General Counsel and

SecretaryMatt Langdon . . . . . . . . . . . . . . . . 44 Chief Financial OfficerSimon Parmett . . . . . . . . . . . . . . . 52 President, Field Operations

Non-Employee Directors:Mark Burton(1) . . . . . . . . . . . . . . . . 59 DirectorMichael Capellas(2)(3) . . . . . . . . . . 62 DirectorSteven Collins(2) . . . . . . . . . . . . . . 52 DirectorGary Little(1) . . . . . . . . . . . . . . . . . . 58 DirectorRavi Mhatre(3) . . . . . . . . . . . . . . . . 49 DirectorAnn Winblad(2)(3) . . . . . . . . . . . . . . 66 Director

(1) Member of our compensation committee.(2) Member of our audit committee.(3) Member of our nominating and corporate governance committee.

Executive Officers

Greg Schott. Mr. Schott has served as our Chief Executive Officer since February 2009 and asa member of our board of directors since March 2009. Mr. Schott served as our President from March2009 to November 2016. Mr. Schott holds a B.S. in Mechanical Engineering from North Carolina StateUniversity and an M.B.A. from Stanford University.

Mr. Schott was selected to serve on our board of directors because of the perspective andexperience he provides as our Chief Executive Officer, as well as his experience with technologycompanies.

Mark Dao. Mr. Dao has served as our Chief Product Officer since January 2016. From May2011 to January 2016, Mr. Dao served as Senior Vice President, Engineering at Ariba Inc., or Ariba, aprovider of cloud-based collaborative commerce applications that was acquired in October 2012 bySAP SE, an enterprise-applications software company. From October 2008 to May 2011, Mr. Daoserved as Senior Director Network Engineering at Ariba. Mr. Dao holds a B.S. in Electrical Engineeringfrom Cornell University and an M.S. in Computer Science from Stanford University.

Rob Horton. Mr. Horton has served as our Senior Vice President, People Ops since November2015 and as our General Counsel and Secretary since August 2013. From February 2012 toJuly 2013, Mr. Horton served as General Counsel at Infoblox Inc., a computer networkingcompany. From February 2005 to January 2012, Mr. Horton served as Senior Vice President andGeneral Counsel at BigBand Networks, Inc., a video networking technology provider. Mr. Horton holdsa B.A. in History from the University of Notre Dame and a J.D. from Northwestern University.

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Matt Langdon. Mr. Langdon has served as our Chief Financial Officer since June 2014. FromJune 2013 to May 2014, Mr. Langdon served as Chief Financial Officer of TIBCO Software Inc., aprovider of infrastructure and business intelligence software. From November 2012 to June 2013,Mr. Langdon served as Senior Vice President, Strategic Operations of TIBCO. From January 2008 toNovember 2012, Mr. Langdon served as Vice President, Corporate Development and InvestorRelations of TIBCO. Mr. Langdon holds a B.A. in Business Administration from the University ofMichigan and an M.B.A. from Northwestern University.

Simon Parmett. Mr. Parmett has served as our President, Field Operations since November2016. Mr. Parmett served as our Senior Vice President, Global Field Operations from March 2011 toNovember 2016. Mr. Parmett previously served as General Manager of the APAC PLM Business Unitat Oracle Corporation, a global computer technology company. Mr. Parmett holds a B.A. in Economicsfrom the University of Pennsylvania and an M.B.A. from Dartmouth College.

Non-Employee Directors

Mark Burton. Mr. Burton has served on our board of directors since January 2009. Over thepast eight years, Mr. Burton has served as an independent director and advisor for several otherprivately held software companies. From October 2016 to February 2017, Mr. Burton served asExecutive Chairman of Datameer Inc., a big data analytics company. From February 2009 to October2015, Mr. Burton served as Executive Chairman at Zend Technologies Ltd., an internet infrastructuresoftware company that was acquired by Rogue Wave Software, Inc., a software developmentcompany, in October 2015. Mr. Burton holds a B.S. in Business Administration with a Concentration inFinance from San Jose State University.

Mr. Burton was selected to serve on our board of directors because of his experience as anadvisor to technology companies.

Michael Capellas. Mr. Capellas has served on our board of directors since June 2015. SinceNovember 2012, Mr. Capellas has served as the founder and Chief Executive Officer of CapellasStrategic Partners, a strategic technology advisory firm. Mr. Capellas served as Chairman of the boardof directors from January 2011 to November 2012, and as Chief Executive Officer from May 2010 toSeptember 2011, of VCE Company, LLC, a joint venture formed between Cisco Systems, Inc., orCisco, a networking equipment company, and EMC Corporation, a computer data storage company.Mr. Capellas currently serves on the boards of directors of Cisco and Flextronics International Ltd., aninternational supply chain solutions company. Mr. Capellas holds a B.A. in Business Administrationfrom Kent State University.

Mr. Capellas was selected to serve on our board of directors because of his experience inexecutive roles and his background of leading global organizations in the technology industry.

Steven Collins. Mr. Collins has served on our board of directors since July 2014. FromJune 2011 to February 2014, Mr. Collins served as the Executive Vice President and Chief FinancialOfficer of ExactTarget, Inc., a cross-channel digital marketing company that was acquired bysalesforce.com, inc., a cloud computing company, in July 2013. Mr. Collins previously served as theChief Financial Officer of NAVTEQ Corporation, a digital mapping company. Mr. Collins currentlyserves on the boards of directors of Shopify Inc., an e-commerce software company, and Instructure,Inc., a learning management software company. Mr. Collins holds a B.S. in Industrial Engineering fromIowa State University and an M.B.A. from the Wharton School of the University of Pennsylvania.Mr. Collins is a Certified Public Accountant.

Mr. Collins was selected to serve on our board of directors because of his software industryexperience, including his experience in finance.

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Gary Little. Mr. Little has served on our board of directors since August 2006. Since 1997,Mr. Little has served as a Partner of Morgenthaler Ventures, a venture capital fund. SinceSeptember 2013, Mr. Little has also served as a General Partner of Canvas Ventures, an early-stageventure capital fund. Mr. Little currently serves on the boards of directors of a number of privately heldcompanies. Mr. Little holds a B.S. in Electrical Engineering from the University of California, LosAngeles and an M.B.A. from Harvard University.

Mr. Little was selected to serve on our board of directors because of his business and venturecapital expertise and extensive experience serving on the boards of directors of technology companies.

Ravi Mhatre. Mr. Mhatre has served on our board of directors since May 2007. Mr. Mhatre co-founded Lightspeed Venture Partners, a global technology venture capital firm, and has served asmanaging director of Lightspeed Venture Partners since August 1999. Mr. Mhatre currently serves onthe boards of directors of Nutanix, Inc., an enterprise cloud platform company, and a number ofprivately held companies. Mr. Mhatre holds a B.A. in Economics, a B.S. in Electrical Engineering, andan M.B.A. from Stanford University.

Mr. Mhatre was selected to serve on our board of directors because of his significant corporatefinance and business expertise and his experience serving on the boards of directors of varioustechnology companies.

Ann Winblad. Ms. Winblad has served as a member of our board of directors sinceSeptember 2006. Ms. Winblad co-founded Hummer Winblad Venture Partners, a venture capital fundfocused on software investing, and has served as its Managing Director since September 1989.Ms. Winblad currently serves on the boards of directors of a number of privately held companies.Ms. Winblad holds a B.A. in Mathematics and Business Administration from the College of St.Catherine, now known as St. Catherine University, and an M.A. in Education with a focus onInternational Economics from the University of St. Thomas.

Ms. Winblad was selected to serve on our board of directors because of her extensive experienceserving on the boards of directors of software companies and her venture capital expertise.

Each executive officer serves at the discretion of our board of directors and holds office until hissuccessor is duly elected and qualified or until his earlier resignation or removal. There are no familyrelationships among any of our directors or executive officers.

Code of Business Conduct and Ethics

Our board of directors has adopted a code of business conduct and ethics that will apply to all ofour employees, officers and directors, including our Chief Executive Officer, Chief Financial Officer andother executive and senior financial officers. The full text of our code of business conduct and ethicswill be posted on the investor relations page on our website. We intend to disclose any amendments toour code of business conduct and ethics, or waivers of its requirements, on our website or in filingsunder the Exchange Act.

Board of Directors

Our business and affairs are managed under the direction of our board of directors. Our board ofdirectors consists of seven directors, six of whom qualify as “independent” under the listing standards

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of the New York Stock Exchange. Pursuant to our current certificate of incorporation and amended andrestated voting agreement, our current directors were elected as follows:

• Greg Schott was elected as the designee reserved for the person serving as our ChiefExecutive Officer;

• Mark Burton was elected as the designee nominated by holders of our common stock;

• Ann Winblad and Gary Little were elected as the designees of holders of our Series A preferredstock;

• Ravi Mhatre was elected as the designee of holders of our Series B preferred stock; and

• Steven Collins and Michael Capellas were elected as the independent designees by our boardof directors.

The provisions of our amended and restated voting agreement relating to the election of ourdirectors will terminate and the provisions of our current certificate of incorporation by which ourdirectors were elected will be amended and restated in connection with this offering. After thecompletion of this offering, the number of directors will be fixed by our board of directors, subject to theterms of our amended and restated certificate of incorporation and amended and restated bylaws thatwill become effective immediately prior to the completion of this offering. Each of our current directorswill continue to serve as a director until the election and qualification of his or her successor, or until hisor her earlier death, resignation or removal.

Classified Board of Directors

Our amended and restated certificate of incorporation that will become effective immediately priorto the completion of this offering will provide that, immediately after the completion of this offering, ourcurrent board of directors will be divided into three classes with staggered three-year terms. Only oneclass of directors will be elected at each annual meeting of stockholders, with the other classescontinuing for the remainder of their respective three-year terms. Our current directors will be dividedamong the three classes as follows:

• The Class I directors will be Greg Schott, Gary Little, and Ann Winblad, and their terms willexpire at the annual meeting of stockholders to be held in 2018;

• The Class II directors will be Michael Capellas and Ravi Mhatre, and their terms will expire atthe annual meeting of stockholders to be held in 2019; and

• The Class III directors will be Mark Burton and Steven Collins, and their terms will expire at theannual meeting of stockholders to be held in 2020.

Each director’s term will continue until the election and qualification of his or her successor, or hisor her earlier death, resignation or removal. Any increase or decrease in the authorized number ofdirectors will be distributed among the three classes so that, as nearly as possible, each class willconsist of one-third of our directors.

This classification of our board of directors may have the effect of delaying or preventing changesin control of our company.

Director Independence

Our board of directors has undertaken a review of the independence of each director. Based oninformation provided by each director concerning his or her background, employment and affiliations,

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our board of directors has determined that none of Messrs. Burton, Capellas, Collins, Little and Mhatreand Ms. Winblad has relationships that would interfere with the exercise of independent judgment incarrying out the responsibilities of a director and that each of these directors is “independent” as thatterm is defined under the listing standards of the New York Stock Exchange. In making thesedeterminations, our board of directors considered the current and prior relationships that each non-employee director has with our company and all other facts and circumstances our board of directorsdeemed relevant in determining their independence and eligibility to serve on the committees of ourboard of directors, including the beneficial ownership of our capital stock by each non-employeedirector, and the transactions involving them described in the sections titled “—Non-Employee DirectorCompensation” and “Certain Relationships and Related Party Transactions.”

Lead Independent Director

Our board of directors has adopted corporate governance guidelines that will provide that one ofour independent directors should serve as our Lead Independent Director at any time when our ChiefExecutive Officer serves as the Chairman of our board of directors or if the Chairman is not otherwiseindependent. Because Mr. Schott is our Chairman and is not an “independent” director as defined inthe listing standards of the New York Stock Exchange, our board of directors has appointed MichaelCapellas to serve as our Lead Independent Director. As Lead Independent Director, Mr. Capellas willpreside over periodic meetings of our independent directors, serve as a liaison between our Chairmanand our independent directors and perform such additional duties as our board of directors mayotherwise determine and delegate.

Committees of Our Board of Directors

Our board of directors has established an audit committee, a compensation committee and anominating and corporate governance committee. The composition and responsibilities of each of thecommittees of our board of directors is described below. Members serve on these committees untiltheir resignation or until otherwise determined by our board of directors.

Audit Committee

Our audit committee is comprised of Messrs. Capellas and Collins and Ms. Winblad, each ofwhom satisfies the requirements for independence and financial literacy under the applicable rules andregulations of the SEC and listing standards of the New York Stock Exchange. Mr. Collins serves asthe chair of our audit committee, qualifies as an “audit committee financial expert” as defined in therules of the SEC, and satisfies the financial expertise requirements under the listing standards of theNew York Stock Exchange. Following the completion of this offering, our audit committee will, amongother things, be responsible for:

• selecting a qualified firm to serve as the independent registered public accounting firm to auditour financial statements;

• helping to ensure the independence and performance of the independent registered publicaccounting firm;

• discussing the scope and results of the audit with the independent registered public accountingfirm, and reviewing, with management and the independent registered public accounting firm,our interim and year-end operating results;

• developing procedures for employees to submit concerns anonymously about questionableaccounting or audit matters;

• reviewing our policies on risk assessment and risk management;

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• reviewing related party transactions; and

• approving or, as required, pre-approving, all audit and all permissible non-audit services, otherthan de minimis non-audit services, to be performed by the independent registered publicaccounting firm.

Upon completion of this offering, our audit committee will operate under a written charter thatsatisfies the applicable rules and regulations of the SEC and the listing standards of the New YorkStock Exchange.

Compensation Committee

Our compensation committee is comprised of Messrs. Burton and Little, each of whom satisfiesthe requirements for independence under the applicable rules and regulations of the SEC and listingstandards of the New York Stock Exchange. Mr. Little serves as the chair of our compensationcommittee. Each member of our compensation committee is also a non-employee director, as definedpursuant to Rule 16b-3 promulgated under the Exchange Act, and an outside director, as definedpursuant to Section 162(m) of the Code. Upon the completion of this offering, our compensationcommittee will, among other things, be responsible for:

• reviewing, approving and determining, or making recommendations to our board of directorsregarding, the compensation of our executive officers;

• administering our equity compensation plans;

• reviewing, approving and making recommendations to our board of directors regardingincentive compensation and equity compensation plans; and

• establishing and reviewing general policies relating to compensation and benefits of ouremployees.

Upon completion of this offering, our compensation committee will operate under a written charterthat satisfies the applicable rules and regulations of the SEC and the listing standards of the New YorkStock Exchange.

Nominating and Corporate Governance Committee

Our nominating and corporate governance committee consists of Messrs. Capellas and Mhatreand Ms. Winblad, each of whom satisfies the requirements for independence under the applicablerules and regulations of the SEC and listing standards of the New York Stock Exchange. Mr. Mhatreserves as the chair of our nominating and corporate governance committee. Following the completionof this offering, our nominating and corporate governance committee will, among other things, beresponsible for:

• identifying, evaluating and selecting, or making recommendations to our board of directorsregarding, nominees for election to our board of directors and its committees;

• evaluating the performance of our board of directors and of individual directors;

• considering and making recommendations to our board of directors regarding the compositionof our board of directors and its committees;

• reviewing developments in corporate governance practices;

• evaluating the adequacy of our corporate governance practices and reporting; and

• developing and making recommendations to our board of directors regarding corporategovernance guidelines and matters.

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Upon the completion of this offering, our nominating and corporate governance committee willoperate under a written charter that satisfies the applicable listing standards of the New York StockExchange.

Compensation Committee Interlocks and Insider Participation

None of the members of our compensation committee is or has been an officer or employee ofour company. None of our executive officers currently serves, or in the past year has served, as amember of the board of directors or compensation committee (or other board committee performingequivalent functions) of any entity that has one or more of its executive officers serving on our board ofdirectors or compensation committee.

Gary Little, a member of our compensation committee, is a Partner at MorgenthalerVentures. During February 2013, in connection with our Series E convertible preferred stock financing,we sold 441,551 shares of our Series E convertible preferred stock to Morgenthaler Partners VIII, L.P.,for an aggregate purchase price of $1,378,460. In March 2014, in connection with our Series Fconvertible preferred stock financing, we sold 153,045 shares of our Series F convertible preferredstock to Morgenthaler Partners VIII, L.P., for an aggregate purchase price of $999,996. In May 2015, inconnection with our Series G convertible preferred stock financing, we sold 8,906 shares of our SeriesG convertible preferred stock to Morgenthaler Partners VIII, L.P., for an aggregate purchase price of$99,990. The sales of our convertible preferred stock to Morgenthaler Partners VIII, L.P. were made onsubstantially the same terms and conditions as all other sales of our convertible preferred stock by usin such financings. Morgenthaler Partners VIII, L.P. is also party to our investors’ rights agreement,right of first refusal and co-sale agreement and voting agreement.

In April 2013, following the closing of our Series E convertible preferred stock financing, we useda portion of the proceeds received from the financing to repurchase an aggregate of 2,051,353 sharesof our common stock from certain of our stockholders, including 98,920 shares held by Mark Burton, amember of our compensation committee. From June 2015 to July 2015, following the closing of ourSeries G convertible preferred stock financing, we used a portion of the proceeds received from thefinancing to conduct a tender offer to repurchase an aggregate of 2,224,222 shares of our commonstock from certain of our employees and board members, including 86,879 shares held by Mr. Burtonand 17,197 shares held by Mr. Burton’s daughter, who served as our employee through September2016. In July 2016, we agreed to waive certain transfer restrictions in connection with, and assist in theadministration of, a tender offer that certain holders of our capital stock and third parties proposed tocommence. An aggregate of 4,346,203 shares of our capital stock, including 74,037 shares held by Mr.Burton, 19,518 shares held by Mr. Burton’s daughter and 2,115,655 shares held by MorgenthalerPartners VIII, L.P., were tendered pursuant to the tender offer. We have also waived our right of firstrefusal in connection with the sale of certain shares of our capital stock by Morgenthaler Partners VIII,L.P.

Mr. Burton’s daughter was employed by us as our Director of Marketing Programs throughSeptember 2016. She earned $145,197, $167,500, $162,500, and $103,769 in annual salary and othercash compensation during 2013, 2014, 2015, and 2016, respectively. She also received options topurchase 15,000 shares of common stock and 14,000 shares of common stock during 2013 and 2015,respectively, and benefits consistent with other employees serving in the same capacity.

See the section titled “Certain Relationships and Related Party Transactions” for furtherdescription of these transactions.

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Non-Employee Director Compensation

Our non-employee directors do not currently receive, and did not receive in 2016, any cashcompensation for their service on our board of directors and committees of our board of directors.

The following table provides information regarding the total compensation that was awarded toeach of our directors who was not serving as an executive officer in 2016.

NameOption

Awards(1)All Other

Compensation Total

Mark Burton(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $67,145 $14,400(3) $81,545Michael Capellas(4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — — —Steven Collins(5) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — — —Gary Little . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — — —Ravi Mhatre . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — — —Ann Winblad . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — — —

(1) The amounts reported represent the aggregate grant-date fair value of the stock options granted to the directors in 2016,calculated in accordance with ASC Topic 718. Such grant-date fair value does not take into account any estimatedforfeitures related to service-vesting conditions. The assumptions used in calculating the grant date fair value of the stockoptions reported in this column are set forth in the notes to our audited consolidated financial statements included in thisprospectus. Other than as set forth in the footnotes below, our non-employee directors did not hold any equity awards as ofDecember 31, 2016.

(2) As of December 31, 2016, Mr. Burton held options to purchase a total of 337,486 shares of our Class B common stock,which consisted of: (i) an option to purchase 67,722 shares, 1/48 of which vested on March 13, 2013, and 1/48 of which vestmonthly thereafter, subject to his continued service to us through each such date; (ii) an option to purchase 10,000 shares,1/48 of which vested on March 3, 2015, and 1/48 of which vest monthly thereafter, subject to his continued service to usthrough each such date; provided, however, in the event that there is a change of control, as defined in the awardagreement, then vesting with respect to 50% of the then unvested shares subject to the option will accelerate and becomevested immediately prior to such change of control; (iii) an option to purchase 25,000 shares, 1/48 of which vested onAugust 1, 2016, and 1/48 of which vest monthly thereafter, subject to his continued service to us through each such date;provided, however, in the event that there is a change of control, as defined in the award agreement, then vesting withrespect to 50% of the then unvested shares subject to the option will accelerate and become vested immediately prior tosuch change of control; and (iv) options to purchase 234,764 shares, which are fully vested.

(3) The amount reported includes $14,400 in payments for advisory services rendered to us by Mr. Burton. Such advisoryarrangement with Mr. Burton ended in November 2016.

(4) As of December 31, 2016, Mr. Capellas held an option to purchase a total of 141,542 shares of our Class B common stock.25% of the shares vested on June 3, 2016, and 1/48 of the shares vest monthly thereafter, subject to his continued serviceto us through each such date; provided, however, in the event that there is a change of control, as defined in the awardagreement, and provided Mr. Capellas executes a general release at the time of the change of control, then vesting withrespect to 50% of the then unvested shares subject to the option will accelerate and become vested immediately prior tosuch change of control.

(5) As of December 31, 2016, Mr. Collins held an option to purchase a total of 138,542 shares of our Class B common stock.25% of the shares vested on July 15, 2015, and 1/48 of the shares vest monthly thereafter, subject to his continued serviceto us through each such date; provided, however, in the event that there is a change of control, as defined in the awardagreement, then vesting with respect to 50% of the then unvested shares subject to the option will accelerate and becomevested immediately prior to such change of control.

Directors who are also our employees receive no additional compensation for their service asdirectors. During 2016, Mr. Schott was our employee. See the section titled “Executive Compensation”for additional information about his compensation.

Outside Director Compensation Policy

In January 2017, our board of directors adopted our Outside Director Compensation Policy.Members of our board of directors who are not our employees are eligible to receive compensationunder our Outside Director Compensation Policy. Our Outside Director Compensation Policy iseffective as of the effective date of the registration statement of which this prospectus forms a part.

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Under our Outside Director Compensation Policy, after the completion of this offering, each non-employee director will be eligible to receive compensation for his or her service consisting of annualcash retainers and equity awards as described below. Our board of directors and our compensationcommittee will have the discretion to amend or terminate our Outside Director Compensation Policy atany time, provided that no such amendment or termination can materially impair the rights of a non-employee director with respect to compensation that already has been paid or awarded, unlessmutually agreed to by the non-employee director and us.

Cash Compensation. Under our Outside Director Compensation Policy, all non-employeedirectors will be entitled to receive the following cash compensation for their services following thecompletion of this offering:

• $30,000 per year for service as a board member

• $15,000 (in cash and/or equity) per year additionally for service as non-executive chairman ofthe board or lead director

• $20,000 per year additionally for service as chair of the audit committee

• $8,000 per year additionally for service as an audit committee member other than chair

• $7,500 per year additionally for service as chair of the nominating and corporate governancecommittee

• $4,000 per year additionally for service as a nominating and corporate governance committeemember other than chair

• $12,000 per year additionally for service as chair of the compensation committee

• $5,000 per year additionally for service as a compensation committee member other than chair

All cash payments to non-employee directors will be paid quarterly in arrears on a prorated basis.

Equity Compensation. Following the completion of this offering, nondiscretionary, automaticgrants of restricted stock units will be made to our non-employee directors under our Outside DirectorCompensation Policy as follows:

• Initial Award. Each person who first becomes a non-employee director after the effective dateof the registration statement of which this prospectus forms a part and following the first annualmeeting of our stockholders, or annual meeting, will be granted a restricted stock unit award, orthe Initial Award, which grant will be effective on the date on which such individual firstbecomes a non-employee director, whether through election by our stockholders orappointment by our board of directors to fill a vacancy, having a value (as described below) of$175,000 multiplied by a fraction, the numerator of which is (a) 12 minus (b) the number of fullmonths between the date of our last annual meeting and the date the individual becomes anon-employee director, and the denominator of which is 12 (with the result rounded down to thenearest whole share). A director who is an employee who ceases to be an employee, but whoremains as a director, will not receive an Initial Award.

• Annual Awards. On the date of each annual meeting beginning with the first annual meetingfollowing the effective date of the registration statement of which this prospectus forms a part,each non-employee director automatically will be granted a restricted stock unit award having avalue (as described below) equal to $175,000 (rounded down to the nearest whole share), orthe Annual Award; provided that any non-employee director who is not continuing as a directorfollowing the applicable annual meeting will not receive an Annual Award with respect to suchannual meeting.

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Notwithstanding the foregoing, for each non-employee director who holds equity awardsgranted prior to the effective date of the registration statement of which this prospectus forms apart, or Pre-IPO Awards, that remain unvested on the annual meeting date, the value of theAnnual Award granted to such non-employee director with respect to the annual meeting will becalculated by subtracting the Pre-IPO Award Value from $175,000. If the Pre-IPO Award Valueis equal to or greater than $175,000, the non-employee director will not receive an AnnualAward with respect to such annual meeting. For purposes of our Outside DirectorCompensation Policy, Pre-IPO Award Value means the intrinsic value of shares subject to aPre-IPO Award that are scheduled to vest during the 12-month period following the date of theannual meeting at which the Annual Award is to be granted, or the Vesting Shares, with suchintrinsic value equal to the difference between the value of the Vesting Shares less theapplicable exercise price of the Vesting Shares, if any. The value of the Vesting Shares willequal the average fair market value (as defined in our 2017 Plan) of one share of our Class Acommon stock for market trading days that occur in the completed calendar month immediatelyprior to the calendar month in which the annual meeting occurs.

• For purposes of our Outside Director Compensation Policy, value will equal the product of(i) the average fair market value of one share of our Class A common stock for the markettrading days that occur in the completed calendar month immediately prior to the calendarmonth in which the grant date of the award occurs and (ii) the aggregate number of shares ofour Class A common stock subject to the award, as applicable.

• Subject to the terms of the Outside Director Compensation Policy, each Initial Award andAnnual Award will vest as to 100% of the shares subject thereto upon the earlier of the one-year anniversary of the grant date or the day prior to our next annual meeting occurring afterthe grant date, subject to the individual’s continued service as a director through the applicablevesting date.

• In the event of a change in control (as defined in our 2017 Plan), each Initial Award or AnnualAward will fully vest, provided that the non-employee director continues to serve as a directorthrough such date.

Non-employee directors also are eligible to receive all types of equity awards (except incentivestock options) under our 2017 Plan (or the applicable equity plan in place at the time of grant),including discretionary awards not covered under our Outside Director Compensation Policy.

Pursuant to the terms of our Outside Director Compensation Policy, no non-employee directormay be issued in any fiscal year, cash payments (including the fees set forth in the Outside DirectorCompensation Policy) with a value greater than $175,000, provided that such limit will be $250,000with respect to any non-employee director who serves in the capacity of non-executive chair of theboard, lead director and/or audit committee chair at any time during the fiscal year. No non-employeedirector may be granted, in any fiscal year, equity awards with a grant date value greater than$600,000, increased to $900,000 in the fiscal year of his or her initial service. Any awards or othercompensation granted to an individual for his or her services as an employee or consultant other thana non-employee director will be excluded for purposes of these limitations.

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EXECUTIVE COMPENSATION

Summary Compensation Table

The following table provides information regarding the total compensation for services rendered inall capacities that was earned by each individual who served as our principal executive officer at anytime in 2016, and our two other most highly compensated executive officers who were serving asexecutive officers as of December 31, 2016. These individuals are our named executive officers for2016.

Name and Principal Position YearSalary

($)Bonus

($)

OptionAwards

($)(1)

Non-EquityIncentive PlanCompensation

($)

All OtherCompensation

($)(2)Total

($)

Greg Schott . . . . . . . . . . . . . . 2016 350,000 — — 106,875(3) — 456,875Chief Executive Officer 2015 350,000 — 1,871,424 137,750(4) 3,081,855 5,441,029

Simon Parmett . . . . . . . . . . . . 2016 300,000 — 1,435,224 278,722(3) — 2,013,946President, Field Operations 2015 300,000 25,000(5) 334,920 380,293(6) 507,000 1,547,213

Mark Dao . . . . . . . . . . . . . . . . 2016 306,667 — 2,591,410 49,000(3) — 2,947,077Chief Product Officer

(1) The amounts disclosed represent the grant date fair value of the stock options granted to the named executive officersduring 2015 and 2016 as computed in accordance with ASC Topic 718. The assumptions used in calculating the grant datefair value of the stock options reported in this column are set forth in the notes to our audited consolidated financialstatements included in this prospectus. Such grant-date fair value does not take into account any estimated forfeituresrelated to service-vesting conditions.

(2) The amounts disclosed represent the difference between the fair market value of shares of our common stock sold by eachnamed executive officer in the 2015 Common Stock Repurchase and the repurchase price we paid to each named executiveofficer, net of the option exercise price. Participation in the 2015 Common Stock Repurchase was generally available to ouremployees and board members, subject to certain restrictions and conditions such as a minimum employment period of oneyear. See the section titled “Certain Relationships and Related Party Transactions—Equity Financings and Repurchases” foradditional information.

(3) The amounts disclosed represent the amounts earned in 2016 under our Executive Incentive Compensation Plan.(4) The amount disclosed represents the amount earned in 2015 under our 2015 Executive Bonus Program.(5) The amount disclosed represents a discretionary bonus awarded for Mr. Parmett’s performance. The discretionary bonus

was not paid in accordance with any formal plan document.(6) The amount disclosed represents commissions paid to Mr. Parmett in 2015 pursuant to his commission program.

Executive Officer Employment Letters

Greg Schott

We entered into an executive employment letter dated February 17, 2017 with Greg Schott, ourChief Executive Officer. The letter has no specific term and provides for at-will employment. The lettersupersedes all existing agreements and understandings Mr. Schott may have concerning hisemployment relationship with us, except that Mr. Schott’s equity awards will continue to be governedby the terms of the applicable equity agreements and plan documents (including any acceleratedvesting provisions). Mr. Schott’s current annual base salary is $350,000.

Simon Parmett

We entered into an executive employment letter dated February 17, 2017 with Simon Parmett,our President, Field Operations. The letter has no specific term and provides for at-willemployment. The letter supersedes all existing agreements and understandings Mr. Parmett may haveconcerning his employment relationship with us, except that Mr. Parmett’s equity awards will continue

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to be governed by the terms of the applicable equity agreements and plan documents (including anyaccelerated vesting provisions). Mr. Parmett’s current annual base salary is $300,000.

Mark Dao

We entered into an executive employment letter dated February 17, 2017 with Mark Dao, ourChief Product Officer. The letter has no specific term and provides for at-will employment. The lettersupersedes all existing agreements and understandings Mr. Dao may have concerning hisemployment relationship with us, except that Mr. Dao’s equity awards will continue to be governed bythe terms of the applicable equity agreements and plan documents (including any accelerated vestingprovisions). Mr. Dao’s current annual base salary is $320,000.

Non-Equity Incentive Plan Compensation

We have adopted an Executive Incentive Compensation Plan. See the section titled “—ExecutiveIncentive Compensation Plan” for a description of this plan.

2016 Performance Targets under our Executive Incentive Compensation Plan

We provided Messrs. Schott and Dao with an opportunity to receive formula-based non-equityincentive payments under our Executive Incentive Compensation Plan based on both companyperformance and individual performance in 2016. The payments were based on a 2016 target incentiveamount for Messrs. Schott and Dao of $150,000 and $80,000, respectively.

The aggregate bonus pool was funded on a scale according to company performance againstpre-determined growth goals. The bonus pool was to be funded upon achievement of over 80%performance against such goals, scaled to 50% of the target incentive amount upon achievement of90% performance, 100% of the target incentive amount upon achievement of 100% performance, anda maximum funding of 200% of the target incentive amount upon achievement of 120% performance.The annual company performance goals related to company product, positioning, customer outcome,culture, and business results.

Once the size of the bonus pool and, therefore, the maximum potential bonus payable to eachparticipant was established, the individual performance component determined the portion of themaximum potential bonus actually paid to participants. The individual performance component wasbased on individual goals which, for Mr. Schott, included goals related to company product, positioning,customer outcome, culture, and business results. Mr. Dao’s individual goals included productdevelopment, growth of product team, and product roadmap. The level of attainment of the individualgoals was assessed on our standard rating system. The aggregate amount of bonus payments madeto Messrs. Schott and Dao for 2016 is set forth in the “Non-Equity Incentive Plan Compensation”column of the Summary Compensation Table above.

We provided Mr. Parmett with an opportunity to receive formula-based commission paymentsunder a commission program under our Executive Incentive Compensation Plan. The commissionpayments were based off of a 2016 target commission amount of $250,000.

Mr. Parmett’s commission program provided for the payment of commissions to Mr. Parmettbased on the achievement of goals relating to new customer engagements, renewals, and services.Each goal had a minimum threshold that needed to be exceeded in order to receive any paymentsrelating to the goal and each goal had a maximum payment for achievement in excess of the targetgoal. In determining Mr. Parmett’s payout under his commission program, our board of directors did not

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exercise any discretion and paid Mr. Parmett commissions based on actual achievement of the goalsset forth in the Plan. The aggregate amount of commissions paid to Mr. Parmett for 2016 is set forth inthe “Non-Equity Incentive Plan Compensation” column of the Summary Compensation Table above.

Pension Benefits and Nonqualified Deferred Compensation

We do not provide a pension plan for our employees, and none of our named executive officersparticipated in a nonqualified deferred compensation plan in 2016.

Outstanding Equity Awards at 2016 Year-End

The following table sets forth information regarding outstanding stock options and stock awardsheld by our named executive officers as of December 31, 2016:

Option Awards

Name Grant Date(1)(2)

Number ofSecuritiesUnderlying

UnexercisedOptions

(#)Exercisable

Number ofSecuritiesUnderlying

UnexercisedOptions

(#)Unexercisable

OptionExercise

Price($)

OptionExpiration

Date

Greg Schott . . . . . . . . . . . . . . . . . . . . . . . . 9/13/2012(3) 443,408 — 0.2625 9/13/202212/24/2013(4) 412,958 180,793 0.68 12/24/2023

2/3/2015(5) 285,000 1,235,000 2.60 2/3/2025Simon Parmett . . . . . . . . . . . . . . . . . . . . . 3/20/2013(6) 226,200 25,000 0.68 3/20/2023

2/3/2015(7) 118,750 181,250 2.60 2/3/20256/16/2016(8)(9) 0 284,375 7.28 6/16/20266/16/2016(8)(10) 26,041 223,959 7.28 6/16/2026

Mark Dao . . . . . . . . . . . . . . . . . . . . . . . . . . 5/4/2016(8)(11)(12) — 1,004,890 7.06 5/4/2026

(1) Unless otherwise noted, each outstanding equity award was granted pursuant to our 2006 Stock Plan.(2) In the event that there is a change of control, as defined in each named executive officer’s award agreement, and on or

within 12 months following the date of such change of control, either the named executive officer’s employment isterminated without cause, as defined in the award agreement, or the named executive officer resigns from hisemployment with good reason, as defined in the award agreement, and provided the named executive officer executes ageneral release at the time of his termination of employment, then vesting with respect to 50% of the unvested sharessubject to each option will accelerate and become vested upon such termination.

(3) One forty-eighth of the shares subject to the option vested on April 1, 2012 and one forty-eighth of the shares vest monthlythereafter, subject to continued service to us.

(4) One forty-eighth of the shares subject to the option vested on January 24, 2014 and one forty-eighth of the shares vestmonthly thereafter, subject to continued service to us.

(5) One forty-eighth of the shares subject to the option vested on April 1, 2016 and one forty-eighth of the shares vest monthlythereafter, subject to continued service to us.

(6) One forty-eighth of the shares subject to the option vested on April 20, 2013 and one forty-eighth of the shares vestmonthly thereafter, subject to continued service to us.

(7) One forty-eighth of the shares subject to the option vested on June 1, 2015 and one forty-eighth of the shares vestmonthly thereafter, subject to continued service to us.

(8) This outstanding equity award was granted pursuant to our 2016 Plan.(9) One thirty-ninth of the shares subject to the option vest on May 1, 2017, and one thirty-ninth of the shares vest monthly

thereafter, subject to continued service to us.(10) One forty-eighth of the shares subject to the option vested on August 1, 2016, and one forty-eighth of the shares vest

monthly thereafter, subject to continued service to us.(11) One-fourth of the shares subject to the option vested on January 16, 2017, and one forty-eighth of the shares vest monthly

thereafter, subject to continued service to us.(12) In addition to the acceleration provision in footnote (2) above, in the event the named executive officer’s employment is

terminated without cause, as defined in the award agreement, not in conjunction with a change of control, as defined inthe award agreement, and before the date that is 12 months following the named executive officer’s vesting

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commencement date, as defined in the award agreement, and provided the named executive officer executes a generalrelease at the time of his termination of employment, then the vesting schedule of the option shall be the following uponsuch termination without cause: One forty-eighth of the shares subject to the option vested on February 16, 2016, and oneforty-eighth of the shares vest monthly thereafter, subject to continued service to us.

Potential Payments upon Termination or Change of Control

In January 2017, we adopted a Severance Policy applicable to our named executive officers andcertain other key employees that superseded all previous severance arrangements we had enteredinto with these eligible employees prior to the Severance Policy becoming effective (except that theindividuals’ equity awards will continue to be governed by the terms of the applicable equityagreements and plan documents, including any accelerated vesting provisions). Under our SeverancePolicy, if any eligible employee is terminated by us other than for cause, as defined in the SeverancePolicy, death or disability, as defined in the Severance Policy, or if the eligible employee terminates hisor her employment with us due to a constructive termination, as defined in the Severance Policy, theeligible employee will be entitled to receive severance benefits as exclusively provided for under theSeverance Policy. Upon the occurrence of such an event, an eligible employee would be entitled to thefollowing if such eligible employee timely signs and does not revoke a separation agreement andrelease of claims: (i) a lump-sum cash severance payment equal to the eligible employee’s rate of paymultiplied by a severance multiple, and (ii) a lump-sum cash payment equal to $1,000 (which will bepaid regardless of whether the eligible employee elects COBRA continuation coverage and can beused for any purpose by the eligible employee). The rate of pay for an eligible employee equals thevalue of one-week of the eligible employee’s base salary. The severance multiple equals four plus theeligible employee’s length of service. For purposes of the Severance Policy, length of service meansthe eligible employee’s number of completed years of continuous service with us beginning with theeligible employee’s most recent hire date through the date of the qualifying termination, with any partialyear of service rounded up to the next full year of service. In the event any of the amounts provided forunder the Severance Policy or otherwise payable to an eligible employee would constitute a “parachutepayment” within the meaning of Section 280G of the Code and could be subject to the related excisetax, the eligible employee would be entitled to receive either full payment of benefits or such lesseramount which would result in no portion of the benefits being subject to the excise tax, whicheverresults in the greater amount of after-tax benefits to the eligible employee.

In addition, each of our named executive officers’ equity awards continues to be governed by theterms of the applicable equity agreements and plan documents, including any accelerated vestingprovisions. In the event that there is a change of control, as defined in each named executive officer’saward agreement, and on or within 12 months following the date of such change of control, either thenamed executive officer’s employment is terminated without cause, as defined in the awardagreement, or the named executive officer resigns for his employment with good reason, as defined inthe award agreement, and provided the named executive officer executes a general release at the timeof his termination of employment, then vesting with respect to 50% of the unvested shares subject toeach award will accelerate and become vested upon such termination. In addition, in the event Mr. Daois terminated without cause, as defined in the award agreement, not in conjunction with a change ofcontrol, as defined in the award agreement, and before the date that is 12 months following Mr. Dao’svesting commencement date, as defined in the award agreement, and provided that Mr. Dao executesa general release at the time of his termination of employment, then the vesting schedule of his May2016 option shall be the following upon such termination without cause: One forty-eighth of the sharessubject to the option vested on February 16, 2016, and one forty-eighth of the shares vest monthlythereafter, subject to continued service to us.

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For purposes of our equity award agreements with our named executive officers, “cause” meansgenerally:

• continued refusal or failure to perform duties reasonably expected of the executive inconnection with his arrangement to provide services to us or any parent, subsidiary, orsuccessor, as applicable (provided that the executive is given 10 days written notice andopportunity to cure);

• unprofessional, unethical, or fraudulent conduct or conduct that discredits us or any parent,subsidiary, or successor, as applicable, or is detrimental to our or any parent’s, subsidiary’s, orsuccessor’s, as applicable, reputation, character, or standing;

• dishonest conduct, or a deliberate attempt to do any injury to us or any parent, subsidiary, orsuccessor, as applicable;

• a material breach of any employment agreement between the executive and us or any parent,subsidiary, or successor, as applicable; or

• a criminal act which would reflect badly on us or any parent, subsidiary, or successor, asapplicable.

For purposes of our equity award agreements with our named executive officers, “good reason”means generally resignation within 30 days following the expiration of any cure period following theoccurrence of one or more of the following, without the executive’s written consent:

• a material reduction of the executive’s duties, position, or responsibilities, or removal fromsuch position and responsibilities, either of which results in a material diminution thereof,unless the executive is provided with a comparable position and unless such reduction issolely by virtue of our company being acquired;

• a material reduction in the executive’s annual base salary (provided that a reduction inannual base salary of 10% or less in any one year will not be considered a materialreduction); or

• a material change in the geographic location of the executive’s primary work facility orlocation (provided that a relocation of less than 50 miles will not be considered a materialchange in geographic location).

A resignation for good reason requires informing us in writing within 90 days of the initialexistence of the grounds for good reason and a cure period of 30 days following the date we receivesuch notice.

Employee Benefit and Stock Plans

2017 Equity Incentive Plan

In March 2017, our board of directors adopted and our stockholders approved our 2017 EquityIncentive Plan, or our 2017 Plan. Our 2017 Plan will be effective on the business day immediately priorto the effective date of the registration statement of which this prospectus forms a part. Our 2017 Planwill provide for the grant of incentive stock options, within the meaning of Section 422 of the Code, toour employees and any parent and subsidiary corporations’ employees, and for the grant ofnonstatutory stock options, stock appreciation rights, restricted stock, restricted stock units, or RSUs,performance units and performance shares to our employees, directors and consultants and our parentand subsidiary corporations’ employees and consultants.

Authorized Shares. A total of 15,200,000 shares of our Class A common stock will be reservedfor issuance pursuant to our 2017 Plan. In addition, the shares of our Class A common stock reserved

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for issuance under our 2017 Plan also will include (a) a number of shares of our Class A commonstock equal to the number of shares of our common stock reserved but unissued under our 2016Equity Incentive Plan, or 2016 Plan, as of immediately prior to the termination of the 2016 Plan and(b) a number of shares of our Class A common stock equal to the number of shares of our commonstock returned to our 2016 Plan or our 2006 Stock Plan, as amended, or 2006 Plan, as the result ofexpiration or termination of awards and a number of shares of our Class A common stock equal to thenumber of shares of our common stock previously issued pursuant to our 2016 Plan or 2006 Plan, asapplicable, that are forfeited or repurchased by us (provided that the maximum number of shares of ourClass A common stock that may be added to our 2017 Plan pursuant to (a) and (b) is25,004,790 shares). The number of shares of our Class A common stock available for issuance underour 2017 Plan will also include an annual increase on the first day of each fiscal year beginning in fiscal2018, equal to the least of:

• 15,840,000 shares of our Class A common stock;

• 5% of the outstanding shares of our Class A common stock and Class B common stock as ofthe last day of the immediately preceding fiscal year; or

• such other amount as our board of directors may determine.

If an award expires or becomes unexercisable without having been exercised in full, issurrendered pursuant to an exchange program, or, with respect to restricted stock, restricted stockunits, performance units or performance shares, is forfeited to or repurchased due to failure to vest, theunpurchased shares (or for awards other than stock options or stock appreciation rights, the forfeitedor repurchased shares) will become available for future grant or sale under the 2017 Plan. With respectto stock appreciation rights, the net shares issued will cease to be available under the 2017 Plan andall remaining shares will remain available for future grant or sale under the 2017 Plan. Shares used topay the exercise price of an award or satisfy the tax withholding obligations related to an award willbecome available for future grant or sale under the 2017 Plan. To the extent an award is paid out incash rather than shares, such cash payment will not result in a reduction in the number of sharesavailable for issuance under the 2017 Plan.

Plan Administration. Our board of directors or one or more committees appointed by our boardof directors will administer our 2017 Plan. The compensation committee of our board of directors isexpected to administer our 2017 Plan. In the case of awards intended to qualify as ‘‘performance-based compensation’’ within the meaning of Section 162(m), the committee will consist of two or more‘‘outside directors’’ within the meaning of Section 162(m). In addition, if we determine it is desirable toqualify transactions under our 2017 Plan as exempt under Rule 16b-3, such transactions will bestructured to satisfy the requirements for exemption under Rule 16b-3. Subject to the provisions of our2017 Plan, the administrator has the power to administer our 2017 Plan, including but not limited to,the power to interpret the terms of our 2017 Plan and awards granted under it, to create, amend andrevoke rules relating to our 2017 Plan, including creating sub-plans, and to determine the terms of theawards, including the exercise price, the number of shares of our Class A common stock subject toeach such award, the exercisability of the awards and the form of consideration, if any, payable uponexercise. The administrator also has the authority to amend existing awards to reduce or increase theirexercise prices, to allow participants the opportunity to transfer outstanding awards to a financialinstitution or other person or entity selected by the administrator and to institute an exchange programby which outstanding awards may be surrendered in exchange for awards of the same type which mayhave a higher or lower exercise price or different terms, awards of a different type and/or cash.

Stock Options. Stock options may be granted under our 2017 Plan. The exercise price ofoptions granted under our 2017 Plan must at least be equal to the fair market value of our Class Acommon stock on the date of grant. The term of an incentive stock option may not exceed 10 years,

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except that with respect to any participant who owns more than 10% of the voting power of all classesof our outstanding stock, the term must not exceed five years and the exercise price must equal atleast 110% of the fair market value on the grant date. The administrator will determine the methods ofpayment of the exercise price of an option, which may include cash, shares or other propertyacceptable to the administrator, as well as other types of consideration permitted by applicable law.After the termination of service of an employee, director or consultant, he or she may exercise his orher option for the period of time stated in his or her option agreement. Generally, if termination is dueto death or disability, the option will remain exercisable for 12 months. In all other cases, the optiongenerally will remain exercisable for three months following the termination of service. An option maynot be exercised later than the expiration of its term. Subject to the provisions of our 2017 Plan, theadministrator determines the other terms of options.

Stock Appreciation Rights. Stock appreciation rights may be granted under our 2017Plan. Stock appreciation rights allow the recipient to receive the appreciation in the fair market value ofour Class A common stock between the exercise date and the date of grant. Stock appreciation rightsmay not have a term exceeding 10 years. After the termination of service of an employee, director orconsultant, he or she may exercise his or her stock appreciation right for the period of time stated in hisor her stock appreciation rights agreement. However, in no event may a stock appreciation right beexercised later than the expiration of its term. Subject to the provisions of our 2017 Plan, theadministrator determines the other terms of stock appreciation rights, including when such rightsbecome exercisable and whether to pay any increased appreciation in cash or with shares of ourClass A common stock, or a combination thereof, except that the per share exercise price for theshares to be issued pursuant to the exercise of a stock appreciation right will be no less than 100% ofthe fair market value per share on the date of grant.

Restricted Stock. Restricted stock may be granted under our 2017 Plan. Restricted stockawards are grants of shares of our Class A common stock that vest in accordance with terms andconditions established by the administrator. The administrator will determine the number of shares ofrestricted stock granted to any employee, director or consultant and, subject to the provisions of our2017 Plan, will determine the terms and conditions of such awards. The administrator may imposewhatever conditions to vesting it determines to be appropriate (for example, the administrator may setrestrictions based on the achievement of specific performance goals or continued service to us);provided, however, that the administrator, in its sole discretion, may accelerate the time at which anyrestrictions will lapse or be removed. Recipients of restricted stock awards generally will have votingand dividend rights with respect to such shares upon grant without regard to vesting, unless theadministrator provides otherwise. Shares of restricted stock that do not vest are subject to our right ofrepurchase or forfeiture.

RSUs. RSUs may be granted under our 2017 Plan. RSUs are bookkeeping entries representingan amount equal to the fair market value of one share of our Class A common stock. Subject to theprovisions of our 2017 Plan, the administrator determines the terms and conditions of RSUs, includingthe vesting criteria (which may include accomplishing specified performance criteria or continuedservice to us) and the form and timing of payment. Notwithstanding the foregoing, the administrator, inits sole discretion, may accelerate the time at which any restrictions will lapse or be removed.

Performance Units and Performance Shares. Performance units and performance shares maybe granted under our 2017 Plan. Performance units and performance shares are awards that will resultin a payment to a participant only if performance goals established by the administrator are achieved orthe awards otherwise vest. The administrator will establish organizational or individual performancegoals or other vesting criteria in its discretion, which, depending on the extent to which they are met,will determine the number and/or the value of performance units and performance shares to be paidout to participants. After the grant of a performance unit or performance share, the administrator, in its

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sole discretion, may reduce or waive any performance criteria or other vesting provisions for suchperformance units or performance shares. Performance units shall have an initial dollar valueestablished by the administrator on or prior to the grant date. Performance shares shall have an initialvalue equal to the fair market value of our Class A common stock on the grant date. The administrator,in its sole discretion, may pay earned performance units or performance shares in the form of cash, inshares of our Class A common stock or in some combination thereof.

Outside Directors. Our 2017 Plan provides that all outside (non-employee) directors will beeligible to receive all types of awards (except for incentive stock options) under our 2017 Plan. Prior tothe completion of this offering, we intend to implement a formal policy pursuant to which our outsidedirectors will be eligible to receive equity awards under our 2017 Plan. In order to provide a maximumlimit on the awards that can be made to our outside directors, our 2017 Plan provides that in any fiscalyear, an outside director will not be granted awards having a grant-date fair value greater than$600,000, increased to $900,000 in the fiscal year that an outside director first joins our board ofdirectors. The grant-date fair values will be determined as follows: (a) with respect to any option orstock appreciation right, grant-date fair value will be calculated in accordance with the Black-Scholesvaluation methodology on the grant date of such option or stock appreciation right, and (b) with respectto any other award, grant-date fair value will equal the product of (i) the average fair market value ofone share of our Class A common stock for the market trading days that occur in the completedcalendar month immediately prior to the calendar month in which the grant date of the award occursand (ii) the aggregate number of shares of our Class A common stock subject to the award, asapplicable. The maximum limits do not reflect the intended size of any potential grants or acommitment to make grants to our outside directors under our 2017 Plan in the future.

Non-Transferability of Awards. Unless the administrator provides otherwise, our 2017 Plangenerally does not allow for the transfer of awards and only the recipient of an award may exercise anaward during his or her lifetime.

Certain Adjustments. In the event of certain changes in our capitalization, to prevent diminutionor enlargement of the benefits or potential benefits available under our 2017 Plan, the administrator willadjust the number and class of shares that may be delivered under our 2017 Plan and/or the number,class and price of shares covered by each outstanding award, and the numerical share limit set forth inour 2017 Plan.

Dissolution or Liquidation. In the event of our proposed liquidation or dissolution, theadministrator will notify participants as soon as practicable, and all awards will terminate immediatelyprior to the consummation of such proposed transaction.

Merger or Change in Control. Our 2017 Plan provides that in the event of a merger or change incontrol, as defined under our 2017 Plan, each outstanding award will be treated as the administratordetermines, except that if a successor corporation or its parent or subsidiary does not assume orsubstitute an equivalent award for any outstanding award, then such award will fully vest, allrestrictions on such award will lapse, all performance goals or other vesting criteria applicable to suchaward will be deemed achieved at 100% of target levels. In addition, if an option or stock appreciationright is not assumed or substituted, the administrator will notify the participant in writing or electronicallythat the option or stock appreciation right will become fully exercisable, for a specified period prior tothe transaction, and will then terminate upon the expiration of the specified period of time. Upon achange in control, awards granted to an outside director will vest fully and become immediatelyexercisable, all restrictions on his or her restricted stock will lapse, all performance goals or othervesting requirements for his or her performance shares and units will be deemed achieved at 100% oftarget levels, and all other terms and conditions met.

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Amendment; Termination. The administrator has the authority to amend, suspend, or terminateour 2017 Plan provided such action does not impair the existing rights of any participant. Our 2017Plan automatically will terminate in 2027, unless we terminate it sooner.

2017 Employee Stock Purchase Plan

In March 2017, our board of directors adopted and our stockholders approved our EmployeeStock Purchase Plan, or the ESPP. Our ESPP will be effective on the effective date of the registrationstatement of which this prospectus forms a part. We believe that allowing our employees to participatein our ESPP provides them with a further incentive towards ensuring our success and accomplishingour corporate goals.

Authorized Shares. A total of 2,540,000 shares of our Class A common stock are available forsale under our ESPP. The number of shares of our Class A common stock available for sale underour ESPP also includes an annual increase on the first day of each fiscal year beginning in fiscal 2018,equal to the least of:

• 5,070,000 shares of our Class A common stock;

• 2% of the outstanding shares of our Class A common stock and Class B common stock as ofthe last day of the immediately preceding fiscal year; or

• such other amount as our board of directors may determine.

Plan Administration. Our compensation committee will administer our ESPP and have full butnon-exclusive authority to interpret the terms of our ESPP and determine eligibility to participate,subject to the conditions of our ESPP, as described below.

Eligibility. Generally, all of our employees will be eligible to participate if they are employed byus, or any participating subsidiary, for at least 20 hours per week and more than five months in anycalendar year. However, an employee may not be granted rights to purchase shares of our Class Acommon stock under our ESPP if such employee:

• immediately after the grant would own capital stock possessing 5% or more of the totalcombined voting power or value of all classes of our capital stock; or

• hold rights to purchase shares of our Class A common stock under all of our employee stockpurchase plans that accrue at a rate that exceeds $25,000 worth of shares of our Class Acommon stock for each calendar year.

Offering Periods. Our ESPP includes a component that allows us to make offerings intended toqualify under Section 423 of the Code and a component that allows us to make offerings not intendedto qualify under Section 423 of the Code to designated companies, as described in our ESPP. OurESPP provides for 24 month offering periods. The offering periods are scheduled to start on the firsttrading day on or after May 10 and November 10 of each year, except for the first offering period,which will commence on the first trading day on or after completion of this offering and will end on thefirst trading day on or after May 10, 2019 . Each offering period will include purchase periods, whichwill be a period of approximately six months commencing with one exercise date and ending with thenext exercise date.

Contributions. Our ESPP permits participants to purchase shares of our Class A common stockthrough payroll deductions of up to 15% of their eligible compensation. A participant may purchase amaximum of 5,000 shares of our Class A common stock during a purchase period.

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Exercise of Purchase Right. Amounts deducted and accumulated by the participant are used topurchase shares of our Class A common stock at the end of each six-month purchase period. Thepurchase price of the shares will be 85% of the lower of the fair market value of our Class A commonstock on the last trading day prior to the first day of each offering period or on the last trading day priorto the exercise date. If the fair market value of our Class A common stock on the last trading day priorto the exercise date is less than the fair market value on the last trading day prior to the first day ofeach offering period, participants will be withdrawn from the current offering period following theirpurchase of shares of our Class A common stock on the purchase date and will be automatically re-enrolled in a new offering period. Participants may end their participation at any time during an offeringperiod and will be paid their accrued contributions that have not yet been used to purchase shares ofour Class A common stock. Participation ends automatically upon termination of employment with us.

Non-Transferability. A participant may not transfer rights granted under our ESPP. If ourcompensation committee permits the transfer of rights, it may only be done by will, the laws of descentand distribution or as otherwise provided under our ESPP.

Merger or Change in Control. Our ESPP provides that, in the event of a merger or change incontrol, as defined under our ESPP, a successor corporation may assume or substitute eachoutstanding purchase right. If the successor corporation refuses to assume or substitute for theoutstanding purchase right, the offering period then in progress will be shortened, and a new exercisedate will be set. The administrator will notify each participant that the exercise date has been changedand that the participant’s option will be exercised automatically on the new exercise date unless prior tosuch date the participant has withdrawn from the offering period.

Amendment; Termination. The administrator has the authority to amend, suspend or terminateour ESPP, except that, subject to certain exceptions described in our ESPP, no such action mayadversely affect any outstanding rights to purchase shares of our Class A common stock under ourESPP. Our ESPP automatically will terminate in 2037, unless we terminate it sooner.

2016 Equity Incentive Plan

In May 2016, our board of directors adopted, and our stockholders approved, our 2016 Plan. Our2016 Plan permits the grant of incentive stock options, within the meaning of Section 422 of the Code,to our employees and any parent and subsidiary corporations’ employees, and for the grant ofnonstatutory stock options, stock appreciation rights, restricted stock, and restricted stock units to ouremployees, directors and consultants and our parent and subsidiary corporations’ employees andconsultants.

Authorized Shares. Our 2016 Plan will be terminated in connection with this offering, andaccordingly, no shares will be available for issuance under the 2016 Plan following the completion ofthis offering. Our 2016 Plan will continue to govern outstanding awards granted thereunder. As ofDecember 31, 2016, options to purchase 8,358,846 shares of our Class B common stock remainedoutstanding under our 2016 Plan.

Plan Administration. Our board of directors or one or more committees appointed by our boardof directors administers our 2016 Plan. Subject to the provisions of our 2016 Plan, our administratorhas the power to administer the plan, including but not limited to, the power to interpret the terms of our2016 Plan and awards granted under it, to prescribe, amend and rescind rules relating to our 2016Plan, including creating sub-plans, and to determine the terms of the awards, including the exerciseprice, the number of shares of our Class B common stock subject to each such award, theexercisability of the awards and the form of consideration, if any, payable upon exercise. Ouradministrator also has the authority to amend existing awards, including the power to extend the post-

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termination exercisability period of awards and to extend the maximum term of an option and to allowparticipants to defer the receipt of the payment of cash or the delivery of shares that otherwise wouldbe due to such participant under an award. The administrator also has the authority to amend existingawards to reduce or increase their exercise prices, to allow participants the opportunity to transferoutstanding awards to a financial institution or other person or entity selected by the administrator andto institute an exchange program by which outstanding awards may be surrendered or cancelled inexchange for awards of the same type which may have a higher or lower exercise price or differentterms, awards of a different type and/or cash and to make all other determinations our administratordeems necessary or advisable for administering the 2016 Plan.

Options. Stock options may be granted under our 2016 Plan. The exercise price of optionsgranted under our 2016 Plan must at least be equal to the fair market value of our common stock onthe date of grant. The term of an incentive stock option may not exceed 10 years, except that withrespect to any participant who owns more than 10% of the voting power of all classes of ouroutstanding stock, the term must not exceed five years and the exercise price must equal at least110% of the fair market value on the grant date. The administrator will determine the methods ofpayment of the exercise price of an option, which may include cash, shares or other propertyacceptable to the administrator, as well as other types of consideration permitted by applicablelaw. After termination of an employee, director or consultant, he or she may exercise his or her optionfor the period of time as specified in the applicable option agreement. If termination is due to death ordisability, the option generally will remain exercisable for at least six months. In all other cases, theoption will generally remain exercisable for at least 30 days. However, in no event may an option beexercised later than the expiration of its term. Subject to the provisions of our 2016 Plan, theadministrator determines the other terms of options.

Stock Appreciation Rights. Stock appreciation rights may be granted under our 2016 Plan.Stock appreciation rights allow the recipient to receive the appreciation in the fair market value of ourcommon stock between the exercise date and the date of grant. Stock appreciation rights may nothave a term exceeding 10 years. After the termination of service of an employee, director orconsultant, he or she may exercise his or her stock appreciation right for the period of time stated in hisor her award agreement. However, in no event may a stock appreciation right be exercised later thanthe expiration of its term. Subject to the provisions of our 2016 Plan, the administrator determines theother terms of stock appreciation rights, including when such rights become exercisable and whether topay any increased appreciation in cash or with shares of our Class B common stock, or a combinationthereof, except that the per share exercise price for the shares of our Class B common stock to beissued pursuant to the exercise of a stock appreciation right will be no less than 100% of the fairmarket value per share on the date of grant.

Restricted Stock. Restricted stock may be granted under our 2016 Plan. Restricted stockawards are grants of shares of our Class B common stock that vest in accordance with terms andconditions established by the administrator. The administrator will determine the number of shares ofrestricted stock granted to any employee, director or consultant and, subject to the provisions of our2016 Plan, will determine the terms and conditions of such awards. The administrator may imposewhatever conditions for lapse of the restriction on the shares it determines to be appropriate (forexample, the administrator may set restrictions based on the achievement of specific performancegoals or continued service to us); provided, however, that the administrator, in its sole discretion, mayaccelerate the time at which any restrictions will lapse or be removed. Recipients of restricted stockawards generally will have voting and dividend rights with respect to such shares upon grant withoutregard to the restriction, unless the administrator provides otherwise. Shares of restricted stock as towhich the restrictions have not lapsed are subject to our right of repurchase or forfeiture.

Restricted Stock Units. Restricted stock units may be granted under our 2016 Plan. Restrictedstock units are bookkeeping entries representing an amount equal to the fair market value of one share

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of our common stock. Subject to the provisions of our 2016 Plan, the administrator will determine theterms and conditions of restricted stock units, including the vesting criteria (which may includeaccomplishing specified performance criteria or continued service to us) and the form and timing ofpayment. Notwithstanding the foregoing, the administrator, in its sole discretion, may accelerate thetime at which any restricted stock units will vest.

Non-Transferability of Awards. Unless the administrator provides otherwise, our 2016 Plangenerally does not allow for the transfer of awards and only the recipient of an award may exercise anaward during his or her lifetime.

Certain Adjustments. In the event of certain changes in our capitalization, to prevent diminutionor enlargement of the benefits or potential benefits available under our 2016 Plan, the administrator willadjust the number and class of shares that may be delivered under our 2016 Plan and/or the number,class and price of shares covered by each outstanding award. In the event of our proposed liquidationor dissolution, the administrator will notify participants as soon as practicable and all awards willterminate immediately prior to the consummation of such proposed transaction.

Merger or Change in Control. Our 2016 Plan provides that in the event of a merger or change incontrol, as defined under the 2016 Plan, each outstanding award will be treated as the administratordetermines, including, without limitation, that (i) awards will be assumed, or substantially equivalentawards will be substituted, by the acquiring or succeeding corporation with appropriate adjustments asto the number and kind of shares and prices; (ii) upon written notice, awards will be terminated upon orimmediately prior to the consummation of such merger or change in control; (iii) outstanding awardswill vest and become exercisable, realizable, or payable, or restrictions applicable to an award willlapse, in whole or in part prior to or upon consummation of such merger or change in control, and, tothe extent the administrator determines, terminate upon or immediately prior to the effectiveness ofsuch merger or change in control; (iv) awards will be terminated in exchange for an amount of cashand/or property or awards will be replaced with other rights or property selected by the administrator inits sole discretion; or (v) any combination of the foregoing. If a successor corporation or its parent orsubsidiary does not assume or substitute an equivalent award for any outstanding award, then suchaward will fully vest, all restrictions on the shares subject to such award will lapse, all performancegoals or other vesting criteria applicable to the shares subject to such award will be deemed achievedat 100% of target levels and all of the shares subject to such award will become fully exercisable, ifapplicable, for a specified period prior to the transaction. The award will then terminate upon theexpiration of the specified period of time. If an option or stock appreciation right becomes fully vestedand exercisable in connection with a change in control due to the successor corporation’s refusal toassume the award, the administrator will notify the applicable participant in writing or electronically thatthe award will be exercisable for a period of time determined by the administrator, and the option orstock appreciation right will terminate upon the expiration of such period.

Amendment; Termination. Our board of directors has the authority to amend, alter, suspend orterminate the 2016 Plan, provided such action will not impair the existing rights of any participant,unless mutually agreed to in writing between the participant and the administrator. As noted above,upon completion of this offering, our 2016 Plan will be terminated and no further awards will be grantedthereunder. All outstanding awards will continue to be governed by their existing terms.

2006 Stock Plan, as Amended

Our board of directors adopted, and our stockholders approved, our 2006 Plan in August 2006.Our 2006 Plan was most recently amended in May 2015. Our 2006 Plan allows for the grant ofincentive stock options, within the meaning of Section 422 of the Code, to our employees and ourparent and subsidiary corporations’ employees, and for the grant of nonstatutory stock options and

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common stock purchase rights to our employees, directors and consultants and our parent andsubsidiary corporations’ employees, directors and consultants.

Authorized Shares. Our 2006 Plan was terminated in connection with the adoption of the 2016Plan, and accordingly, no shares are available for issuance under the 2006 Plan. Our 2006 Plan willcontinue to govern outstanding awards granted thereunder. As of December 31, 2016, options topurchase 13,556,778 shares of our Class B common stock remained outstanding under our 2006 Plan.

Plan Administration. Our board of directors or a committee of our board (the administrator)administers our 2006 Plan. Subject to the provisions of the 2006 Plan, the administrator has the fullauthority and discretion to take any actions it deems necessary or advisable for the administration ofthe 2006 Plan, including but not limited to instituting an exchange program, as defined under the 2006Plan. The administrator has the power to construe and interpret the terms of our 2006 Plan and awardsgranted under it, to prescribe, amend and rescind rules relating to our 2006 Plan, including rules andregulations relating to sub-plans, and to determine the terms and conditions of the awards, includingthe exercise price, the number of shares of our Class B common stock subject to each such award,any vesting acceleration or waiver of forfeiture restrictions, and any restrictions or limitations regardingawards or the shares relating thereto. All decisions, interpretations and other actions of theadministrator are final and binding on all participants in the 2006 Plan.

Options. Stock options may be granted under our 2006 Plan. The exercise price per share of alloptions must equal at least 100% of the fair market value per share of our common stock on the dateof grant, as determined by the administrator. The term of a stock option may not exceed 10 years. Withrespect to any participant who owns 10% of the voting power of all classes of our outstanding stock asof the grant date, the term of an incentive stock option granted to such participant must not exceed fiveyears and the exercise price per share of such incentive stock option must equal at least 110% of thefair market value per share of our common stock on the date of grant, as determined by theadministrator. Except in the case of options granted to officers, directors and consultants, options willbecome exercisable at a rate of no less than 20% per year over five years from the date the optionsare granted. The administrator determines the terms and conditions of options.

After termination of an employee, director or consultant, he or she may exercise his or her optionfor the period of time as specified in the applicable option agreement. If termination is due to death ordisability, the option generally will remain exercisable for at least six months. In all other cases, theoption will generally remain exercisable for at least 30 days. However, an option generally may not beexercised later than the expiration of its term.

Stock Purchase Rights. Shares of our Class B common stock may be granted under our 2006Plan as a purchasable award. The shares may be subject to a repurchase option, whereby we mayrepurchase any shares that remain unvested at the time of a participant’s termination. Except withrespect to shares purchased by officers, directors and consultants, the repurchase option will in nocase lapse at a rate of less than 20% per year over five years from the date of purchase. Theadministrator determines the terms and conditions of stock purchase rights.

Transferability of Awards. Unless our administrator provides otherwise, our 2006 Plan generallydoes not allow for the transfer or assignment of options or stock purchase rights, except by will or bythe laws of descent and distribution.

Certain Adjustments. In the event of certain changes in our capitalization, in order to preventdiminution or enlargement of the benefits or potential benefits intended to be made available under the2006 Plan, the administrator will adjust the number and class of shares that may be delivered underour 2006 Plan and/or the number, class and price of shares covered by each outstanding award.

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Merger or Change in Control. Our 2006 Plan provides that, in the event that we are a party to amerger or change in control, outstanding options and stock purchase rights may be assumed orsubstituted by the successor corporation or a parent or subsidiary thereof. In the event the successorcorporation refuses to assume or substitute for the option or stock purchase right, then such awardswill terminate upon the consummation of the merger or change in control. Our board of directors may,in its sole discretion, provide for the acceleration of the exercisability and vesting in connection with achange in control of any or all outstanding options and stock purchase rights, subject to conditions andto the discretion of our board of directors. If an option or stock purchase right becomes fully vested andexercisable, as applicable, in connection with a change in control due to the successor corporation’srefusal to assume the award, the administrator will notify the applicable participant in writing orelectronically that the option or stock purchase right will be fully vested and exercisable, as applicable,for a period of time as determined by our administrator, contingent upon the consummation of thechange in control, and the award will terminate upon expiration of such period.

Amendment; Termination. Our board of directors may amend, suspend or terminate our 2006Plan at any time, provided that such action does not impair a participant’s rights under outstandingawards without such participant’s written consent. As noted above, our 2006 Plan has been terminatedand no further awards will be granted thereunder. All outstanding awards will continue to be governedby their existing terms.

Executive Incentive Compensation Plan

Our board of directors adopted our Executive Incentive Compensation Plan, or our IncentiveCompensation Plan in December 2016. Our Incentive Compensation Plan allows our compensationcommittee to provide cash incentive awards to employees selected by our compensation committee,including our named executive officers, based upon performance goals established by ourcompensation committee.

Under our Incentive Compensation Plan, our compensation committee determines theperformance goals applicable to any award, which goals may include, without limitation, the attainmentof research and development milestones, sales bookings, business divestitures and acquisitions, cashflow, cash position, change to recurring revenue, earnings (which may include any calculation ofearnings, including but not limited to earnings before interest and taxes, earnings before taxes,earnings before interest, taxes, depreciation and amortization and net earnings), earnings per share,net income, net profit, net sales, operating cash flow, operating expenses, operating income, operatingmargin, overhead or other expense reduction, product defect measures, product release timelines,productivity, profit, return on assets, return on capital, return on equity, return on investment, return onsales, revenue, revenue growth, sales results, sales growth, stock price, time to market, totalstockholder return, working capital and individual objectives such as peer reviews or other subjective orobjective criteria. The performance goals may differ from participant to participant and from award toaward.

Our compensation committee currently administers our Incentive Compensation Plan. Theadministrator of our Incentive Compensation Plan may, in its sole discretion and at any time, increase,reduce or eliminate a participant’s actual award, and/or increase, reduce or eliminate the amountallocated to the bonus pool for a particular performance period. The actual award may be below, at orabove a participant’s target award, in the discretion of the administrator. The administrator maydetermine the amount of any reduction on the basis of such factors as it deems relevant, and it is notrequired to establish any allocation or weighting with respect to the factors it considers.

Actual awards are paid in cash only after they are earned, which usually requires continuedemployment through the last day of the performance period and the date the actual award is paid.

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Payment of awards occurs as soon as administratively practicable after they are earned, but no laterthan the dates set forth in our Incentive Compensation Plan.

Our board of directors and our compensation committee have the authority to amend, alter,suspend or terminate our Incentive Compensation Plan, provided such action does not impair theexisting rights of any participant with respect to any earned awards.

401(k) Plan

We maintain a tax-qualified retirement plan, or the 401(k) plan, that provides eligible employeeswith an opportunity to save for retirement on a tax-advantaged basis. Eligible employees are able toparticipate in the 401(k) plan as of the first day of the month following the date they meet the 401(k)plan’s eligibility requirements, and participants are able to defer up to 85% of their eligiblecompensation subject to applicable annual Code limits. All participants’ interests in their deferrals are100% vested when contributed. The 401(k) plan permits us to make matching contributions and profitsharing contributions to eligible participants, although we have not made any such contributions todate.

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CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS

In addition to the compensation arrangements, including employment, termination of employmentand change in control arrangements, discussed in the sections titled “Management” and “ExecutiveCompensation,” the following is a description of each transaction since January 1, 2013 and eachcurrently proposed transaction in which:

• we have been or are to be a participant;

• the amount involved exceeded or will exceed $120,000; and

• any of our directors, executive officers or holders of more than 5% of our outstanding capitalstock, or any immediate family member of, or person sharing the household with, any of theseindividuals or entities, had or will have a direct or indirect material interest.

Equity Financings and Repurchases

Series E Convertible Preferred Stock Financing

From February 2013 through March 2013, we sold an aggregate of 11,851,905 shares of ourSeries E convertible preferred stock at a purchase price of $3.12186 per share, for an aggregatepurchase price of $36,999,988. The following table summarizes purchases of our Series E convertiblepreferred stock by related persons:

Stockholder

Shares ofSeries E

ConvertiblePreferred Stock

TotalPurchase

Price

Entities affiliated with New Enterprise Associates(1) . . . . . . . . . . . . . . . . . . 8,008,046 $24,999,998Lightspeed Venture Partners VII, L.P.(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,474,779 $ 4,604,054Hummer Winblad Venture Partners V, L.P.(3) . . . . . . . . . . . . . . . . . . . . . . . 800,804 $ 2,499,998Entities affiliated with Bay Partners(4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 463,790 $ 1,447,887Morgenthaler Partners VIII, L.P.(5) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 441,551 $ 1,378,460Sapphire Ventures Fund I, L.P.(6) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 342,614 $ 1,069,593

(1) Affiliates of New Enterprise Associates holding our securities whose shares are aggregated for purposes of reporting shareownership information are New Enterprise Associates 14, L.P. and NEA Ventures 2013, L.P. Entities affiliated with NewEnterprise Associates together hold more than 5% of our outstanding capital stock.

(2) Ravi Mhatre, a member of our board of directors, is the Founder and Managing Director of Lightspeed Venture Partners.(3) Ann Winblad, a member of our board of directors, is a Co-Founder and Managing Director at Hummer Winblad Venture

Partners.(4) Affiliates of Bay Partners holding our securities whose shares are aggregated for purposes of reporting share ownership

information are Bay Partners XI Parallel Fund, L.P. and Bay Partners XI, L.P. Entities affiliated with Bay Partners togetherhold more than 5% of our outstanding capital stock.

(5) Gary Little, a member of our board of directors, is a Partner at Morgenthaler Ventures.(6) Sapphire Ventures Fund I, L.P. holds more than 5% of our outstanding capital stock.

In April 2013 following the closing of our Series E convertible preferred stock financing, we used aportion of the proceeds received from the financing to repurchase shares of our common stock fromcertain of our stockholders, including Greg Schott, our Chief Executive Officer, Mark Burton, one of ourdirectors, and Ross Mason, a holder of more than 5% of our outstanding capital stock. Werepurchased an aggregate of 2,051,353 shares of our common stock, including 485,165 shares,98,920 shares and 999,158 shares held by Messrs. Schott, Burton and Mason, respectively, at a priceof $3.12186 per share.

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Series F Convertible Preferred Stock Financing

In March 2014, we sold an aggregate of 7,736,448 shares of our Series F convertible preferredstock at a purchase price of $6.534 per share, for an aggregate purchase price of $50,549,951. Thefollowing table summarizes purchases of our Series F convertible preferred stock by related persons:

Stockholder

Shares ofSeries F


TotalPurchase

Price

Lightspeed Venture Partners Select, L.P.(1) . . . . . . . . . . . . . . . . . . . . . . . . 2,066,115 $13,499,995Entities affiliated with New Enterprise Associates(2) . . . . . . . . . . . . . . . . . . 2,066,114 $13,499,989Sapphire Ventures Fund I, L.P.(3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 765,228 $ 5,000,000Entities affiliated with Hummer Winblad Venture Partners(4)(5) . . . . . . . . . . 765,227 $ 4,999,993Entities affiliated with Bay Partners(6) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 612,181 $ 3,999,991Morgenthaler Partners VIII, L.P.(7) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 153,045 $ 999,996

(1) Ravi Mhatre, a member of our board of directors, is the Founder and Managing Director of Lightspeed Venture Partners.(2) Affiliates of New Enterprise Associates holding our securities whose shares are aggregated for purposes of reporting share

ownership information are New Enterprise Associates 2013, L.P. and New Enterprise Associates 14, L.P. Entities affiliatedwith New Enterprise Associates together hold more than 5% of our outstanding capital stock.

(3) Sapphire Ventures Fund I, L.P. holds more than 5% of our outstanding capital stock.(4) Affiliates of Hummer Winblad Venture Partners holding our securities whose shares are aggregated for purposes of

reporting share ownership information are Hummer Winblad Venture Partners V, L.P. and Hummer Winblad VenturePartners VI, L.P.

(5) Ann Winblad, a member of our board of directors, is a Co-Founder and Managing Director at Hummer Winblad VenturePartners.

(6) Affiliates of Bay Partners holding our securities whose shares are aggregated for purposes of reporting share ownershipinformation are Bay Partners XI Parallel Fund, L.P. and Bay Partners XI, L.P. Entities affiliated with Bay Partners togetherhold more than 5% of our outstanding capital stock.

(7) Gary Little, a member of our board of directors, is a Partner at Morgenthaler Ventures.

Series G Convertible Preferred Stock Financing

In May 2015, we sold an aggregate of 11,427,533 shares of our Series G convertible preferredstock at a purchase price of $11.22726 per share, for an aggregate purchase price of $128,299,884.The following table summarizes purchases of our Series G convertible preferred stock by relatedpersons:

Stockholder

Shares ofSeries G


TotalPurchase

Price

Entities affiliated with New Enterprise Associates(1) . . . . . . . . . . . . . . . . . . 1,514,170 $16,999,980Lightspeed Venture Partners Select, L.P.(2) . . . . . . . . . . . . . . . . . . . . . . . . 890,689 $ 9,999,997Entities affiliated with Bay Partners(3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 89,068 $ 999,990Entities affiliated with Hummer Winblad Venture Partners(4)(5) . . . . . . . . . . 8,906 $ 99,990Morgenthaler Partners VIII, L.P.(6) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8,906 $ 99,990Sapphire Ventures Fund I, L.P.(7) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8,906 $ 99,990

(1) Affiliates of New Enterprise Associates holding our securities whose shares are aggregated for purposes of reporting shareownership information are New Enterprise Associates 14, L.P., New Enterprise Associates 15, L.P., and NEA 15Opportunity Fund, L.P. Entities affiliated with New Enterprise Associates together hold more than 5% of our outstandingcapital stock.

(2) Ravi Mhatre, a member of our board of directors, is the Founder and Managing Director of Lightspeed Venture Partners.(3) Affiliates of Bay Partners holding our securities whose shares are aggregated for purposes of reporting share ownership

information are Bay Partners XI Parallel Fund, L.P. and Bay Partners XI, L.P. Entities affiliated with Bay Partners togetherhold more than 5% of our outstanding capital stock.

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(4) Affiliates of Hummer Winblad Venture Partners holding our securities whose shares are aggregated for purposes ofreporting share ownership information are Hummer Winblad Venture Partners V, L.P. and Hummer Winblad VenturePartners VI, L.P.

(5) Ann Winblad, a member of our board of directors, is a Co-Founder and Managing Director at Hummer Winblad VenturePartners.

(6) Gary Little, a member of our board of directors, is a Partner at Morgenthaler Ventures.(7) Sapphire Ventures Fund I, L.P. holds more than 5% of our outstanding capital stock.

From June 2015 to July 2015, following the closing of our Series G convertible preferred stockfinancing, we used a portion of the proceeds received from the financing to conduct a tender offer torepurchase shares of our common stock from certain of our employees and board members. GregSchott, Simon Parmett and Rob Horton, each of whom is one of our executive officers, Mark Burton,Ross Mason, and Mr. Burton’s daughter, who was employed by us through September 2016, soldshares of our common stock in the tender offer. Participation in the tender offer was generally availableto our employees and service providers, subject to certain restrictions and conditions such as aminimum employment period of one year. We repurchased an aggregate of 2,224,222 shares of ourcommon stock, including 754,015 shares, 148,800 shares, 49,190 shares, 86,879 shares, 200,000shares, and 17,197 shares held by Messrs. Schott, Parmett, Horton, Burton and Mason and Mr.Burton’s daughter, respectively, pursuant to the tender offer at a price of $11.22726 per share.

Investors’ Rights Agreement

We are party to an investors’ rights agreement which provides, among other things, that certainholders of our capital stock, including entities affiliated with Bay Partners, entities affiliated withHummer Winblad Venture Partners, entities affiliated with Lightspeed Venture Partners, MorgenthalerPartners VIII, L.P., entities affiliated with New Enterprise Associates and Sapphire Ventures Fund I,L.P., have the right to demand that we file a registration statement or request that their shares of ourcapital stock be covered by a registration statement that we are otherwise filing. See the section titled“Description of Capital Stock—Registration Rights” for additional information regarding theseregistration rights.

Voting Agreement

We are party to a voting agreement under which certain holders of our capital stock, includingentities affiliated with Bay Partners, entities affiliated with Hummer Winblad Venture Partners, entitiesaffiliated with Lightspeed Venture Partners, Morgenthaler Partners VIII, L.P., entities affiliated with NewEnterprise Associates and Sapphire Ventures Fund I, L.P., have agreed as to the manner in which theywill vote their shares of our capital stock on certain matters, including with respect to the election ofdirectors. Upon completion of this offering, the voting agreement will terminate, and none of ourstockholders will have any special rights regarding the election or designation of members of our boardof directors.

Right of First Refusal

Pursuant to certain of our equity compensation plans and agreements, including a right of firstrefusal and co-sale agreement with certain holders of our capital stock, including entities affiliated withBay Partners, entities affiliated with Hummer Winblad Venture Partners, entities affiliated withLightspeed Venture Partners, Ross Mason, Morgenthaler Partners VIII, L.P., entities affiliated with NewEnterprise Associates, Sapphire Ventures Fund I, L.P. and Greg Schott, we or our assignees have aright to purchase shares of our capital stock that certain stockholders propose to sell to other parties.This right will terminate upon completion of this offering. Since January 1, 2013, we have waived ourright of first refusal in connection with the sale of certain shares of our capital stock in a series of

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transactions, including sales by Ross Mason, Simon Parmett, Greg Schott and Morgenthaler PartnersVIII, L.P., and purchases by entities affiliated with Lightspeed Venture Partners, New EnterpriseAssociates and Sapphire Ventures Fund I, L.P.

In addition, in July 2016, we agreed to waive certain transfer restrictions in connection with, andassist in the administration of, a tender offer that certain holders of our capital stock and third partiesproposed to commence. In August 2016, these parties commenced the tender offer to purchase sharesof our capital stock from certain of our securityholders, including Morgenthaler Partners VIII, L.P., RossMason, Greg Schott, Matt Langdon, our Chief Financial Officer, Simon Parmett, Rob Horton, MarkBurton, Steven Collins, and Mr. Burton’s daughter. An aggregate of 4,346,203 shares of our capitalstock, including 2,115,655 shares, 341,013 shares, 86,550 shares, 159,873 shares, 73,174 shares,74,037 shares, 3,000 shares, 743,601 shares, and 19,518 shares held by Morgenthaler Partners VIIIL.P., Messrs. Schott, Langdon, Parmett, Horton, Burton, Collins and Mason, and Mr. Burton’sdaughter, respectively, were tendered at a price of $14.18 per share. See the section titled “PrincipalStockholders” for additional information regarding beneficial ownership of our capital stock.

Service Arrangements

Ross Mason is employed by us as our Vice President, Product Strategy. He earned $194,500,$236,595, $257,000, and $258,500 in annual salary and other cash compensation during 2013, 2014,2015 and 2016, respectively. He also received benefits consistent with other employees serving in asimilar capacity.

During 2013, 2014, 2015 and 2016, we incurred $584,572, $689,913, $1,110,761 and $1,784,603of expense for professional services, technical support services and other technical services providedon our behalf by Ricston Ltd. and Ricston UK Ltd. Ross Mason has a 30% equity ownership in RicstonLtd.

During 2014, 2015 and 2016, we incurred $68,990, $107,928 and $62,990 of expense for thelicense of business analytics software and related training and services fees provided by Birst, Inc.Entities affiliated with Hummer Winblad Venture Partners have a 14% equity ownership in Birst, Inc.

During 2014, 2015, and 2016, we incurred $24,480, $62,475, and $42,500 of expense for anapplication delivery platform provided by NGINX, Inc. and sponsorship of NGINX, Inc.’s conference.Entities affiliated with New Enterprise Associates have approximately a 19% equity ownership inNGINX, Inc.

The daughter of Mark Burton was employed by us as our Director of Marketing Programs throughSeptember 2016. She earned $145,197, $167,500, $162,500 and $103,769 in annual salary and othercash compensation during 2013, 2014, 2015 and 2016, respectively. See the section titled“Management—Compensation Committee Interlocks and Insider Participation” for further information.

Limitation of Liability and Indemnification of Officers and Directors

We adopted an amended and restated certificate of incorporation, which will become effectiveimmediately prior to the completion of this offering, and which contains provisions that limit the liabilityof our directors for monetary damages to the fullest extent permitted by Delaware law. Consequently,our directors will not be personally liable to us or our stockholders for monetary damages for anybreach of fiduciary duties as directors, except liability for the following:

• any breach of their duty of loyalty to our company or our stockholders;

• any act or omission not in good faith or that involves intentional misconduct or a knowingviolation of law;

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• unlawful payments of dividends or unlawful stock repurchases or redemptions as provided inSection 174 of the Delaware General Corporation Law; or

• any transaction from which they derived an improper personal benefit.

Any amendment to, or repeal of, these provisions will not eliminate or reduce the effect of theseprovisions in respect of any act, omission or claim that occurred or arose prior to that amendment orrepeal. If the Delaware General Corporation Law is amended to provide for further limitations on thepersonal liability of directors of corporations, then the personal liability of our directors will be furtherlimited to the greatest extent permitted by the Delaware General Corporation Law.

In addition, we adopted amended and restated bylaws, which will become effective immediatelyprior to the completion of this offering, and which provide that we will indemnify, to the fullest extentpermitted by law, any person who is or was a party or is threatened to be made a party to any action,suit or proceeding by reason of the fact that he or she is or was one of our directors or officers or is orwas serving at our request as a director or officer of another corporation, partnership, joint venture,trust, or other enterprise. Our amended and restated bylaws provide that we may indemnify to thefullest extent permitted by law any person who is or was a party or is threatened to be made a party toany action, suit or proceeding by reason of the fact that he or she is or was one of our employees oragents or is or was serving at our request as an employee or agent of another corporation, partnership,joint venture, trust, or other enterprise. Our amended and restated bylaws also provide that we mustadvance expenses incurred by or on behalf of a director or officer in advance of the final disposition ofany action or proceeding, subject to limited exceptions.

Further, we have entered into or will enter into indemnification agreements with each of ourdirectors and executive officers that may be broader than the specific indemnification provisionscontained in the Delaware General Corporation Law. These indemnification agreements require us,among other things, to indemnify our directors and executive officers against liabilities that may ariseby reason of their status or service. These indemnification agreements also require us to advance allexpenses incurred by the directors and executive officers in investigating or defending any such action,suit or proceeding. We believe that these agreements are necessary to attract and retain qualifiedindividuals to serve as directors and executive officers.

The limitation of liability and indemnification provisions that are included in our amended andrestated certificate of incorporation, amended and restated bylaws and in indemnification agreementsthat we have entered into or will enter into with our directors and executive officers may discouragestockholders from bringing a lawsuit against our directors and executive officers for breach of theirfiduciary duties. They may also reduce the likelihood of derivative litigation against our directors andexecutive officers, even though an action, if successful, might benefit us and otherstockholders. Further, a stockholder’s investment may be adversely affected to the extent that we paythe costs of settlement and damage awards against directors and executive officers as required bythese indemnification provisions. At present, we are not aware of any pending litigation or proceedinginvolving any person who is or was one of our directors, officers, employees or other agents or is orwas serving at our request as a director, officer, employee or agent of another corporation, partnership,joint venture, trust, or other enterprise, for which indemnification is sought, and we are not aware ofany threatened litigation that may result in claims for indemnification.

We have obtained insurance policies under which, subject to the limitations of the policies,coverage is provided to our directors and executive officers against loss arising from claims made byreason of breach of fiduciary duty or other wrongful acts as a director or executive officer, includingclaims relating to public securities matters, and to us with respect to payments that may be made by usto these directors and executive officers pursuant to our indemnification obligations or otherwise as amatter of law.

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Certain of our non-employee directors may, through their relationships with their employers, beinsured and/or indemnified against certain liabilities incurred in their capacity as members of our boardof directors.

The underwriting agreement provides for indemnification by the underwriters of us and ourofficers and directors for certain liabilities arising under the Securities Act or otherwise.

Insofar as indemnification for liabilities arising under the Securities Act may be permitted todirectors, officers or persons controlling our company pursuant to the foregoing provisions, we havebeen informed that, in the opinion of the SEC, such indemnification is against public policy asexpressed in the Securities Act and is therefore unenforceable.

Policies and Procedures for Related Party Transactions

Our board of directors has adopted a formal written policy providing that our audit committee willbe responsible for reviewing “related party transactions,” which are transactions, arrangements orrelationships (or any series of similar transactions, arrangements or relationships), to which we are aparty, in which the aggregate amount involved exceeds or may be expected to exceed $120,000 and inwhich a related person has, had or will have a direct or indirect material interest. For purposes of thispolicy, a related person is defined as a director, executive officer, nominee for director or greater than5% beneficial owner of our capital stock, in each case since the beginning of the most recentlycompleted year, and any of their immediate family members. In determining whether to approve orratify any such transaction, our audit committee will take into account, among other factors it deemsappropriate, (i) whether the transaction is on terms no less favorable than terms generally available tounaffiliated third parties under the same or similar circumstances and (ii) the extent of the relatedparty’s interest in the transaction. The policy will grant standing pre-approval of certain transactions,including (i) certain compensation arrangements of executive officers, (ii) certain director compensationarrangements, (iii) transactions with another company at which a related party’s only relationship is asa non-executive employee, director or beneficial owner of less than 10% of that company’s shares andthe aggregate amount involved does not exceed the greater of $200,000 or 2% of the company’s totalannual revenue, (iv) transactions where a related party’s interest arises solely from the ownership ofour common stock and all holders of our common stock received the same benefit on a pro rata basis,and (v) transactions available to all U.S. employees generally.

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PRINCIPAL STOCKHOLDERS

The following table sets forth certain information with respect to the beneficial ownership of ourcapital stock as of December 31, 2016 and as adjusted to reflect the sale of our Class A common stockoffered by us in this offering assuming no exercise of the underwriters’ option to purchase additionalshares of our Class A common stock from us, for:

• each of our named executive officers;

• each of our directors;

• all of our current directors and executive officers as a group; and

• each person known by us to be the beneficial owner of more than 5% of our Class A commonstock or Class B common stock.

We have determined beneficial ownership in accordance with the rules of the SEC, and thus itrepresents sole or shared voting or investment power with respect to our securities. Unless otherwiseindicated below, to our knowledge, the persons and entities named in the table have sole voting andsole investment power with respect to all shares that they beneficially owned, subject to communityproperty laws where applicable. The information does not necessarily indicate beneficial ownership forany other purpose, including for purposes of Sections 13(d) and 13(g) of the Securities Act.

We have based our calculation of the percentage of beneficial ownership prior to this offering onno shares of our Class A common stock outstanding and 112,991,577 shares of our Class B commonstock outstanding as of December 31, 2016, which includes 86,030,961 shares of our Class B commonstock resulting from the automatic conversion and reclassification of all outstanding shares of ourconvertible preferred stock into our Class B common stock immediately prior to the completion of thisoffering, as if this conversion and reclassification had occurred as of December 31, 2016. We havebased our calculation of the percentage of beneficial ownership after this offering on 13,000,000shares of our Class A common stock and 112,991,577 shares of our Class B common stockoutstanding immediately after the completion of this offering, assuming that the underwriters will notexercise their option to purchase up to an additional 1,950,000 shares of our Class A common stockfrom us in full. We have deemed shares of our common stock subject to stock options that arecurrently exercisable or exercisable within 60 days of December 31, 2016 to be outstanding and to bebeneficially owned by the person holding the stock option for the purpose of computing the percentageownership of that person. We did not deem these shares outstanding, however, for the purpose ofcomputing the percentage ownership of any other person.

Unless otherwise indicated, the address of each beneficial owner listed in the table below is c/oMuleSoft, Inc., 77 Geary Street, Suite 400, San Francisco, California 94108.

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Beneficial OwnershipPrior to the Offering

Beneficial OwnershipAfter the Offering

Percent ofTotal Voting

Power After theOfferingName of Beneficial Owner Number Percent Number Percent

Named Executive Officers andDirectors:

Greg Schott(1) . . . . . . . . . . . . . . . . . . . 3,306,931 2.9% 3,306,931 2.6% 2.9%Simon Parmett(2) . . . . . . . . . . . . . . . . . 789,493 * 789,493 * *Mark Dao(3) . . . . . . . . . . . . . . . . . . . . . 272,157 * 272,157 * *Mark Burton(4) . . . . . . . . . . . . . . . . . . . 337,486 * 337,486 * *Michael Capellas . . . . . . . . . . . . . . . . . 58,975 * 58,975 * *Steven Collins(5) . . . . . . . . . . . . . . . . . 138,542 * 138,542 * *Gary Little(6) . . . . . . . . . . . . . . . . . . . . . 8,428,150 7.5 8,428,150 6.7 7.4Ravi Mhatre(7) . . . . . . . . . . . . . . . . . . . 19,319,523 17.1 19,319,523 15.3 16.9Ann Winblad(8) . . . . . . . . . . . . . . . . . . . 17,847,745 15.8 17,847,745 14.2 15.6All executive officers and directors as

a group (11 persons)(9) . . . . . . . . . . 51,628,925 44.4 51,628,925 39.9 43.95% Stockholders:Entities affiliated with Lightspeed

Venture Partners(10) . . . . . . . . . . . . . 19,319,523 17.1 19,319,523 15.3 16.9Entities affiliated with Hummer

Winblad Venture Partners(11) . . . . . 17,847,745 15.8 17,847,745 14.2 15.6Entities affiliated with New Enterprise

Associates(12) . . . . . . . . . . . . . . . . . . 16,126,198 14.3 16,126,198 12.8 14.1Morgenthaler Partners VIII, L.P.(13) . . 8,428,150 7.5 8,428,150 6.7 7.4Sapphire Ventures Fund I, L.P.(14) . . . 7,627,018 6.8 7,627,018 6.1 6.7Entities affiliated with Bay

Partners(15) . . . . . . . . . . . . . . . . . . . . 7,058,407 6.3 7,058,407 5.6 6.2Ross Mason(16) . . . . . . . . . . . . . . . . . . 6,692,415 5.9 6,692,415 5.3 5.8

* Represents beneficial ownership of less than one percent (1%) of the outstanding shares of our common stock.(1) Consists of (i) 2,040,433 shares held of record by Mr. Schott and (ii) 1,266,498 shares subject to options exercisable within

60 days of December 31, 2016, all of which are vested as of such date.(2) Consists of (i) 367,461 shares held of record by Mr. Parmett and (ii) 422,032 shares subject to options exercisable within 60

days of December 31, 2016, all of which are vested as of such date.(3) Consists of 272,157 shares subject to options exercisable within 60 days of December 31, 2016, all of which are vested as

of such date.(4) Consists of 337,486 shares subject to options exercisable within 60 days of December 31, 2016, of which 311,652 shares

are vested as of such date.(5) Consists of 138,542 shares subject to options exercisable within 60 days of December 31, 2016, of which 88,412 shares are

vested as of such date.(6) Consists of the shares listed in footnote (13) below, which are held by Morgenthaler Partners VIII, L.P. Mr. Little is a

managing member of Morgenthaler Management Partners VIII, LLC, who shares voting and dispositive power with respectto the shares held by Morgenthaler Partners VIII, L.P.

(7) Consists of the shares listed in footnote (10) below, which are held by entities affiliated with Lightspeed Venture Partners(the Lightspeed Entities). Mr. Mhatre is a managing director of Lightspeed Ultimate General Partner VII, Ltd. (LightspeedUGP) and a managing member of Lightspeed Ultimate General Partner Select, Ltd. (Select UGP), and each of LightspeedUGP and Select UGP are the general partners of the general partners of the Lightspeed Entities. Mr. Mhatre shares votingand dispositive power with respect to the shares held by the Lightspeed Entities.

(8) Consists of the shares listed in footnote (11) below, which are held by entities affiliated with Hummer Winblad VenturePartners (the HWVP Entities). Ms. Winblad is a managing director of the general partners of the HWVP Entities and sharesvoting and dispositive power with respect to the shares held by the HWVP Entities.

(9) Consists of (i) 48,352,297 shares beneficially owned by our current executive officers and directors and (ii) 3,276,628 sharessubject to options exercisable within 60 days of December 31, 2016, of which 2,923,702 shares are vested as of such date.

(10) Consists of (i) 15,747,715 shares held of record by Lightspeed Venture Partners VII, L.P. (Lightspeed VII) and (ii) 3,571,808shares held of record by Lightspeed Venture Partners Select, L.P. (Lightspeed Select). Lightspeed General Partner VII, L.P.(Lightspeed GP) is the general partner of Lightspeed VII. Lightspeed UGP is the general partner of Lightspeed GP. BarryEggers, Ravi Mhatre, Peter Nieh and Christopher Schaepe are the managing directors of Lightspeed UGP and share votingand dispositive power with respect to the shares held by Lightspeed VII. Lightspeed General Partner Select, L.P. (SelectGP) is the general partner of Lightspeed Select. Select UGP is the general partner of Select GP. Barry Eggers, Christopher

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Schaepe, Jeremy Liew, John Vrionis, Peter Nieh and Ravi Mhatre are the managing members of Select UGP and sharevoting and dispositive power with respect to the shares held by Lightspeed Select. The address for these entities is 2200Sand Hill Road, Menlo Park, California 94025.

(11) Consists of (i) 17,540,569 shares held of record by Hummer Winblad Venture Partners V, L.P. (HWVP V) and (ii) 307,176shares held of record by Hummer Winblad Venture Partners VI, L.P. (HWVP VI). Hummer Winblad Equity Partners V, L.L.C.(HW Equity V) is the general partner of HWVP V, and Hummer Winblad Equity Partners VI, L.L.C. (HW Equity VI) is thegeneral partner of HWVP VI. John Hummer, Mitchell Kertzman and Ann Winblad are the managing directors of HW Equity Vand HW Equity VI and share voting and dispositive power over the shares held by HWVP V and HWVP VI. The address forthese entities is Pier 33 South, The Embarcadero, Suite 300, San Francisco, California 94111.

(12) Consists of (i) 12,679,970 shares held of record by New Enterprise Associates 14, L.P. (NEA 14), (ii) 2,576,939 shares heldof record by New Enterprise Associates 15, L.P. (NEA 15), (iii) 858,978 shares held of record by NEA 15 Opportunity Fund,L.P. (NEA OPP 15), and (iv) 10,311 shares held of record by NEA Ventures 2013, L.P. (Ven 13). NEA Partners 14, L.P.(NEA Partners 14) is the sole general partner of NEA 14. NEA 14 GP, LTD (NEA 14 LTD) is the sole general partner of NEAPartners 14. M. James Barrett, Peter J. Barris, Forest Baskett, Anthony A. Florence, Jr., Patrick J. Kerins, David M. Mott,Scott D. Sandell, Peter Sonsini, and Ravi Viswanathan are the directors of NEA 14 LTD. NEA Partners 15, L.P. (NEAPartners 15) is the sole general partner of NEA 15. NEA 15 GP, LLC (NEA 15 LLC) is the sole general partner of NEAPartners 15. Peter J. Barris, Forest Baskett, Anthony A. Florence, Jr., Joshua Makower, David M. Mott, Jon Sakoda, ScottD. Sandell, Peter Sonsini, and Ravi Viswanathan are the managers (Managers) of NEA 15 LLC. The shares directly held byNEA OPP 15 are indirectly held by NEA Partners 15-OF, L.P. (NEA Partners 15-OF), the sole general partner of NEA OPP15, NEA 15 LLC, the sole general partner of NEA Partners 15-OF, and each of the Managers. The shares directly held byVen 13 are indirectly held by Karen P. Welsh, the general partner of Ven 13. The address for each of these entities is c/oNew Enterprise Associates, Inc., 1954 Greenspring Drive, Suite 600, Timonium, Maryland 21093.

(13) Morgenthaler Management Partners VIII, LLC is the sole general partner of Morgenthaler Partners VIII, L.P. Robin Bellas,John Lutsi, Gary Morgenthaler, Bob Pavey, Gary Little, Hank Plain, Ralph Christoffersen, and Peter Taft, the managingmembers of Morgenthaler Management Partners VIII, LLC, together with Morgenthaler Management Partners VIII, LLC,share voting control and investment power over the shares held by Morgenthaler Partners VIII, L.P. The address for theseentities is 3200 Alpine Road, Portola Valley, California 94028.

(14) Sapphire Ventures (GPE) I, L.L.C. (Sapphire GPE) is the general partner of Sapphire Ventures Fund I, L.P. (SapphireLP). Nino Marakovic, Richard Douglas Higgins, Jayendra Das, David Hartwig and Andreas Weiskam are the managingmembers of Sapphire GPE and share voting and dispositive power with respect to the shares held by Sapphire LP. Theaddress for each of these entities is 3408 Hillview Avenue, Building 5, Palo Alto, California 94304.

(15) Consists of (i) 7,016,747 shares held of record by Bay Partners XI, L.P. (Bay Partners) and (ii) 41,660 shares held of recordby Bay Partners XI Parallel Fund, L.P. (Bay Parallel). Bay Management Company XI, LLC (Bay Management) is the generalpartner of each of Bay Partners and Bay Parallel. Stuart G. Phillips is the manager of Bay Management and has sole votingand dispositive power with respect to the shares held by Bay Partners and Bay Parallel. The address of each of theseentities and Mr. Phillips is 2180 Sand Hill Road, Suite 345, Menlo Park, California 94025.

(16) Consists of (i) 6,122,401 shares held of record by Mr. Mason and (ii) 570,014 shares subject to options exercisable within60 days of December 31, 2016, all of which are vested as of such date.

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DESCRIPTION OF CAPITAL STOCK

General

The following is a summary of the rights of our common stock and preferred stock and certainprovisions of our amended and restated certificate of incorporation and amended and restated bylawsas they are expected to be in effect at the completion of this offering. This summary does not purport tobe complete and is qualified in its entirety by the provisions of our amended and restated certificate ofincorporation, amended and restated bylaws and amended and restated investors’ rights agreement,copies of which are filed as exhibits to the registration statement of which this prospectus forms a part,and to the applicable provisions of Delaware law.

Immediately following the completion of this offering, our authorized capital stock will consist of1,300,000,000 shares of capital stock, $0.000025 par value per share, of which:

• 1,000,000,000 shares are designated as Class A common stock;

• 200,000,000 shares are designated as Class B common stock; and

• 100,000,000 shares are designated as preferred stock.

As of December 31, 2016, there were no shares of our Class A common stock outstanding and112,991,577 shares of our Class B common stock outstanding, held by 367 stockholders of record,and no shares of our preferred stock outstanding, assuming the automatic conversion andreclassification of all outstanding shares of our convertible preferred stock into shares of our Class Bcommon stock effective immediately prior to the completion of this offering.

Class A Common Stock and Class B Common Stock

Dividend Rights

Subject to preferences that may apply to any shares of preferred stock outstanding at the time,the holders of our common stock are entitled to receive dividends out of funds legally available if ourboard of directors, in its discretion, determines to issue dividends and then only at the times and in theamounts that our board of directors may determine.

Voting Rights

The holders of our Class A common stock are entitled to one vote per share, and the holders ofour Class B common stock are entitled to 10 votes per share. The holders of our Class A commonstock and Class B common stock will generally vote together as a single class on all matters submittedto a vote of our stockholders, unless otherwise required by Delaware law or our amended and restatedcertificate of incorporation. Delaware law could require either holders of our Class A common stock orClass B common stock to vote separately as a single class in the following circumstances:

• if we were to seek to amend our amended and restated certificate of incorporation to increaseor decrease the par value of a class of our capital stock, then that class would be required tovote separately to approve the proposed amendment; and

• if we were to seek to amend our amended and restated certificate of incorporation in a mannerthat alters or changes the powers, preferences or special rights of a class of our capital stock ina manner that affected its holders adversely, then that class would be required to voteseparately to approve the proposed amendment.

Our stockholders do not have the ability to cumulate votes for the election of directors. Ouramended and restated certificate of incorporation and amended and restated bylaws provide for a

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classified board of directors consisting of three classes of approximately equal size, each class servingstaggered three-year terms. Only one will be elected at each annual meeting of our stockholders, withthe other classes continuing for the remainder of their respective three-year terms.

No Preemptive or Similar Rights

Our Class A common stock and Class B common stock are not entitled to preemptive rights andare not subject to conversion, redemption or sinking fund provisions.

Right to Receive Liquidation Distributions

If we become subject to a liquidation, dissolution or winding-up, the assets legally available fordistribution to our stockholders would be distributable ratably among the holders of our common stockand any participating preferred stock outstanding at that time, subject to prior satisfaction of alloutstanding debt and liabilities and the preferential rights and payment of liquidation preferences, ifany, on any outstanding shares of preferred stock.

Conversion

Each share of our Class B common stock is convertible at any time at the option of the holder intoone share of our Class A common stock. In addition, each share of our Class B common stock willconvert automatically into one share of our Class A common stock upon any transfer, whether or notfor value, except for certain transfers described in our amended and restated certificate ofincorporation, including transfers for tax and estate planning purposes so long as the transferringholder of Class B common stock continues to hold exclusive voting and dispositive power with respectto the shares transferred.

All outstanding shares of Class B common stock will automatically convert into Class A commonstock on the earlier of (i) the five-year anniversary of the completion of this offering or (ii) when theoutstanding shares of Class B common stock represents less than 15% of the total outstanding capitalstock. Once transferred and converted into a share of our Class A common stock, the converted shareof our Class B common stock will not be reissued. In addition, following the conversion of alloutstanding shares of our Class B common stock into Class A common stock, no further shares of ourClass B common stock will be issued.

Fully Paid and Non-Assessable

All of the outstanding shares of our Class B common stock are, and the shares of our Class Acommon stock to be issued pursuant to this offering will be, fully paid and non-assessable.

Preferred Stock

After the completion of this offering, no shares of our preferred stock will be outstanding.Pursuant to our amended and restated certificate of incorporation, our board of directors will have theauthority, without further action by the stockholders, to issue from time to time shares of preferredstock in one or more series. Our board of directors may designate the rights, preferences, privilegesand restrictions of the preferred stock, including dividend rights, conversion rights, voting rights,redemption rights, liquidation preference, sinking fund terms, and the number of shares constitutingany series or the designation of any series. The issuance of preferred stock could have the effect ofrestricting dividends on our Class A common stock and Class B common stock, diluting the votingpower of our common stock, impairing the liquidation rights of our Class A common stock and Class B

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common stock, or delaying, deterring, or preventing a change in control. Such issuance could have theeffect of decreasing the market price of our Class A common stock. We currently have no plans toissue any shares of preferred stock.

Options

As of December 31, 2016, we had outstanding options under our equity compensation plans topurchase an aggregate of 21,915,624 shares of our Class B common stock, with a weighted-averageexercise price of $4.54 per share.

Warrant

As of December 31, 2016, we had an outstanding warrant to purchase an aggregate of 19,640shares of our convertible preferred stock, with an exercise price of $0.76375 per share. Immediatelyprior to the completion of this offering, this warrant will be converted and reclassified into a warrant topurchase an aggregate of 19,640 shares of our Class B common stock. This warrant is exercisable atany time on or before the third anniversary of the effective date of this offering.

Registration Rights

At the completion of this offering, certain holders of our Class B common stock will be entitled torights with respect to the registration of their shares under the Securities Act. These registration rightsare contained in our Sixth Amended and Restated Investors’ Rights Agreement, or IRA, dated as ofMay 13, 2015. We and certain holders of our preferred stock are parties to the IRA. The registrationrights set forth in the IRA will expire on the earlier of five years following the completion of this offeringor, with respect to any particular stockholder, when such stockholder is able to sell all of its sharesentitled to registration rights pursuant to Rule 144 of the Securities Act during any 90-day periodfollowing the completion of this offering. We will pay the registration expenses (other than underwritingdiscounts, commissions and stock transfer taxes) of the holders of the shares registered pursuant tothe registrations described below. In an underwritten offering, the underwriters have the right, subjectto specified conditions, to limit the number of shares such holders may include. In addition, inconnection with this offering, we expect that each stockholder that has registration rights will agree notto sell or otherwise dispose of any securities without the prior written consent of the underwriters for aperiod of 180 days after the date of this prospectus, subject to certain terms and conditions and earlyrelease of certain holders in specified circumstances. See the section titled “Underwriting” for additionalinformation regarding such restrictions.

Demand Registration Rights

After the completion of this offering, the holders of up to 86,747,775 shares of our Class Bcommon stock will be entitled to certain demand registration rights. At any time beginning six monthsafter the effective date of this offering, the holders of at least 30% of these shares then outstanding canrequest that we file a registration statement to register the offer and sale of their shares. We areobligated to effect only two such registrations. Such request for registration must cover securities theanticipated aggregate public offering price of which, before payment of underwriting discounts andcommissions, is greater than $15,000,000. If we determine that it would be seriously detrimental to usand our stockholders to effect such a demand registration, we have the right to defer such registration,not more than once in any 12-month period, for a period of up to 90 days.

Piggyback Registration Rights

After the completion of this offering, the holders of up to 86,767,415 shares of our Class Bcommon stock (including 19,640 shares of our Class B common stock issuable upon the exercise of a

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warrant that was outstanding as of December 31, 2016) will be entitled to certain “piggyback”registration rights. If we propose to register the offer and sale of shares of our common stock under theSecurities Act, all holders of these shares then outstanding can request that we include their shares insuch registration, subject to certain marketing and other limitations. As a result, whenever we proposeto file a registration statement under the Securities Act, other than with respect to (i) a demandregistration, (ii) a Form S-3 registration, (iii) a registration related to the offer and sale of debtsecurities, (iv) a registration related to any employee benefit plan or a corporate reorganization or othertransaction covered by Rule 145 promulgated under the Securities Act or (v) a registration on anyregistration form which does not permit secondary sales, the holders of these shares are entitled tonotice of the registration and have the right, subject to certain limitations, to include their shares in theregistration.

S-3 Registration Rights

After the completion of this offering, the holders of up to 86,747,775 shares of our Class Bcommon stock will be entitled to certain Form S-3 registration rights. The holders of at least 30% ofthese shares then outstanding can request that we register the offer and sale of their shares on aregistration statement on Form S-3 if we are eligible to file a registration statement on Form S-3 solong as the request covers securities the anticipated aggregate public offering price of which, beforepayment of underwriting discounts and commissions, is at least $1,000,000. These stockholders maymake an unlimited number of requests for registration on a registration statement on Form S-3.However, we will not be required to effect a registration on Form S-3 if we have effected two suchregistrations within the 12-month period preceding the date of the request and such registrations havebeen ordered or declared effective. Additionally, if we determine that it would be seriously detrimentalto us and our stockholders to effect such a registration, we have the right to defer such registration, notmore than once in any 12-month period, for a period of up to 90 days.

Anti-Takeover Provisions

The provisions of our amended and restated certificate of incorporation and our amended andrestated bylaws, which are summarized below, may have the effect of delaying, deferring ordiscouraging another person from acquiring control of us. These provisions and certain provisions ofDelaware law, which are summarized below, may discourage takeovers, coercive of otherwise. Theseprovisions are also designed, in part, to encourage persons seeking to acquire control of us tonegotiate first with our board of directors. We believe that the benefits of increased protection of ourpotential ability to negotiate with an unfriendly or unsolicited acquirer outweigh the disadvantages ofdiscouraging a proposal to acquire us because negotiation of these proposals could result in animprovement of their terms.

Delaware Law

We will be governed by the provisions of Section 203 of the Delaware General CorporationLaw. In general, Section 203 prohibits a public Delaware corporation from engaging in a “businesscombination” with an “interested stockholder” for a period of three years after the date of thetransaction in which the person became an interested stockholder, unless:

• the transaction was approved by the board of directors prior to the time that the stockholderbecame an interested stockholder;

• upon consummation of the transaction which resulted in the stockholder becoming aninterested stockholder, the interested stockholder owned at least 85% of the voting stock of thecorporation outstanding at the time the transaction commenced, excluding shares owned by

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directors who are also officers of the corporation and shares owned by employee stock plans inwhich employee participants do not have the right to determine confidentially whether sharesheld subject to the plan will be tendered in a tender or exchange offer; or

• at or subsequent to the time the stockholder became an interested stockholder, the businesscombination was approved by the board of directors and authorized at an annual or specialmeeting of the stockholders, and not by written consent, by the affirmative vote of at least two-thirds of the outstanding voting stock which is not owned by the interested stockholder.

In general, Section 203 defines a “business combination” to include mergers, asset sales andother transactions resulting in financial benefit to a stockholder and an “interested stockholder” as aperson who, together with affiliates and associates, owns, or within three years did own, 15% or moreof the corporation’s outstanding voting stock. These provisions may have the effect of delaying,deferring or preventing changes in control of our company.

Amended and Restated Certificate of Incorporation and Amended and Restated BylawProvisions

Our amended and restated certificate of incorporation and our amended and restated bylaws willinclude a number of provisions that could deter hostile takeovers or delay or prevent changes in controlof our board of directors or management team, including the following:

Board of Directors Vacancies. Our amended and restated certificate of incorporation andamended and restated bylaws will authorize only our board of directors to fill vacant directorships,including newly created seats. In addition, the number of directors constituting our board of directorswill be permitted to be set only by a resolution adopted by a majority vote of our entire board ofdirectors. These provisions would prevent a stockholder from increasing the size of our board ofdirectors and then gaining control of our board of directors by filling the resulting vacancies with its ownnominees. This will make it more difficult to change the composition of our board of directors and willpromote continuity of management.

Dual Class Stock. As described above in the section titled “—Class A Common Stock andClass B Common Stock—Voting Rights,” our amended and restated certificate of incorporation willprovide for a dual class common stock structure, which will provide our current stockholders,executives and employees with significant influence over all matters requiring stockholder approval,including the election of directors and significant corporate transactions, such as a merger or other saleof our company or its assets.

Classified Board. Our amended and restated certificate of incorporation and amended andrestated bylaws will provide that our board of directors is classified into three classes of directors. Athird party may be discouraged from making a tender offer or otherwise attempting to obtain control ofus as it is more difficult and time consuming for stockholders to replace a majority of the directors on aclassified board of directors. See the section titled “Management—Classified Board of Directors.”

Stockholder Action; Special Meeting of Stockholders. Our amended and restated certificate ofincorporation will provide that our stockholders may not take action by written consent but may onlytake action at annual or special meetings of our stockholders. As a result, a holder controlling amajority of our capital stock would not be able to amend our amended and restated bylaws or removedirectors without holding a meeting of our stockholders called in accordance with our amended andrestated bylaws. Our amended and restated bylaws will further provide that special meetings of ourstockholders may be called only by our board of directors, the chairman of our board of directors, ourChief Executive Officer or our President, thus prohibiting a stockholder from calling a special

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meeting. These provisions might delay the ability of our stockholders to force consideration of aproposal or for stockholders controlling a majority of our capital stock to take any action, including theremoval of directors.

Advance Notice Requirements for Stockholder Proposals and Director Nominations. Ouramended and restated bylaws will provide advance notice procedures for stockholders seeking to bringbusiness before our annual meeting of stockholders or to nominate candidates for election as directorsat our annual meeting of stockholders. Our amended and restated bylaws will specify certainrequirements regarding the form and content of a stockholder’s notice. These provisions mightpreclude our stockholders from bringing matters before our annual meeting of stockholders or frommaking nominations for directors at our annual meeting of stockholders if the proper procedures arenot followed. We expect that these provisions may also discourage or deter a potential acquirer fromconducting a solicitation of proxies to elect the acquirer’s own slate of directors or otherwise attemptingto obtain control of our company.

No Cumulative Voting. The Delaware General Corporation Law provides that stockholders arenot entitled to cumulate votes in the election of directors unless a corporation’s certificate ofincorporation provides otherwise. Our amended and restated certificate of incorporation does notprovide for cumulative voting.

Directors Removed Only for Cause. Our amended and restated certificate of incorporation willprovide that stockholders may remove directors only for cause.

Amendment of Charter Provisions. Any amendment of the above provisions in our amendedand restated certificate of incorporation would require approval by holders of at least 66 2/3% of ourthen outstanding capital stock.

Issuance of Undesignated Preferred Stock. Our board of directors will have the authority,without further action by our stockholders, to designate and issue shares of preferred stock with rightsand preferences, including voting rights, designated from time to time by our board of directors. Theexistence of authorized but unissued shares of undesignated preferred stock would enable our boardof directors to render more difficult or to discourage an attempt to obtain control of us by means of amerger, tender offer, proxy contest or other means.

Transfer Agent and Registrar

Upon the completion of this offering, the transfer agent and registrar for our Class A commonstock and Class B common stock will be Computershare Trust Company, N.A. The transfer agent andregistrar’s address is 250 Royall Street, Canton, Massachusetts 02021.

Limitations of Liability and Indemnification

See the section titled “Certain Relationships and Related Party Transactions—Limitation ofLiability and Indemnification of Officers and Directors.”

Listing

We have applied for the listing of our Class A common stock on the New York Stock Exchangeunder the symbol “MULE”.

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SHARES ELIGIBLE FOR FUTURE SALE

Prior to the completion of this offering, there has been no public market for shares of our commonstock. Future sales of shares of our Class A common stock in the public market after this offering, orthe perception that these sales may occur, could adversely affect the prevailing market price at suchtime and our ability to raise equity capital in the future.

Following the completion of this offering, based on the number of shares of our capital stockoutstanding as of December 31, 2016, a total of 13,000,000 shares of our Class A common stock and112,991,577 shares of our Class B common stock will be outstanding. Of these shares, all13,000,000 shares of our Class A common stock sold in this offering will be eligible for sale in thepublic market without restriction under the Securities Act, except that any shares of our Class Acommon stock purchased in this offering by our “affiliates,” as that term is defined in Rule 144 underthe Securities Act, would only be able to be sold in compliance with the conditions of Rule 144described below.

The remaining shares of our Class B common stock will be deemed “restricted securities,” as thatterm is defined in Rule 144 under the Securities Act. These restricted securities will be eligible for salein the public market only if they are registered or if they qualify for an exemption from registration underRule 144 or Rule 701 under the Securities Act, which rules are summarized below. Subject to the lock-up and market standoff agreements described below, the provisions of our IRA described under thesection titled “Description of Capital Stock—Registration Rights,” the applicable conditions of Rule 144or Rule 701, and our insider trading policy, these restricted securities will be eligible for sale in thepublic market from time to time beginning 181 days after the date of this prospectus.

Lock-Up and Market Standoff Agreements

We, our executive officers, directors and holders of a substantial majority of our common stockand securities convertible into or exchangeable for shares of our common stock have entered into orwill enter into lock-up agreements with the underwriters of this offering under which we and they haveagreed that, subject to certain exceptions, without the prior written consent of Goldman, Sachs & Co.and J.P. Morgan Securities LLC, we and they will not dispose of or hedge any shares or any securitiesconvertible into or exchangeable for shares of our common stock for a period of 180 days after thedate of this prospectus. The consent of Goldman, Sachs & Co. and J.P. Morgan Securities LLC isrequired to release any of the securities subject to these lock-up agreements. In addition, our executiveofficers, directors and holders of all of our common stock and securities convertible into orexchangeable for shares of our common stock have entered into market standoff agreements with usunder which they have agreed that, subject to certain exceptions, without our consent, they will notdispose of or hedge any shares or any securities convertible into or exchangeable for shares of ourcommon stock for a period of 180 days after the date of this prospectus. We will agree that, without theprior written consent of Goldman, Sachs & Co. and J.P. Morgan Securities LLC, we will not release anyof the securities subject to these market standoff agreements. See the section titled “Underwriting.”

Rule 144

Rule 144 generally provides that, once we have been subject to the public company reportingrequirements of Section 13 or Section 15(d) of the Exchange Act for at least 90 days, a stockholderwho is not deemed to have been one of our affiliates at any time during the preceding 90 days and whohas beneficially owned the shares of our common stock proposed to be sold for at least six months isentitled to sell such shares in reliance upon Rule 144 without complying with the volume limitation,manner of sale or notice conditions of Rule 144. If such stockholder has beneficially owned the shares

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of our common stock proposed to be sold for at least one year, then such person is entitled to sell suchshares in reliance upon Rule 144 without complying with any of the conditions of Rule 144.

Rule 144 also provides that a stockholder who is deemed to have been one of our affiliates at anytime during the preceding 90 days and who has beneficially owned the shares of our common stockproposed to be sold for at least six months is entitled to sell such shares in reliance upon Rule 144within any three-month period beginning 90 days after the date of this prospectus a number of sharesthat does not exceed the greater of:

• 1% of the number of shares of our capital stock then outstanding, which will equal1,259,916 shares immediately after the completion of this offering; or

• the average weekly trading volume of our common stock during the four calendar weekspreceding the filing of a notice on Form 144 with respect to such sale.

Sales of our common stock made in reliance upon Rule 144 by a stockholder who is deemed tohave been one of our affiliates at any time during the preceding 90 days are also subject to the currentpublic information, manner of sale and notice conditions of Rule 144.

Rule 701

Rule 701 generally provides that, once we have been subject to the public company reportingrequirements of Section 13 or Section 15(d) of the Exchange Act for at least 90 days, a stockholderwho purchased shares of our common stock pursuant to a written compensatory benefit plan orcontract and who is not deemed to have been one of our affiliates at any time during the preceding 90days may sell such shares in reliance upon Rule 144 without complying with the current publicinformation or holding period conditions of Rule 144. Rule 701 also provides that a stockholder whopurchased shares of our common stock pursuant to a written compensatory benefit plan or contractand who is deemed to have been one of our affiliates during the preceding 90 days may sell suchshares under Rule 144 without complying with the holding period condition of Rule 144. However, allstockholders who purchased shares of our common stock pursuant to a written compensatory benefitplan or contract are required to wait until 90 days after the date of this prospectus before selling suchshares pursuant to Rule 701.

Registration Rights

After the completion of this offering, the holders of up to 86,767,415 shares of our Class Bcommon stock (including 19,640 shares of our Class B common stock issuable upon the exercise of awarrant that was outstanding as of December 31, 2016) will be entitled to certain rights with respect tothe registration of such shares under the Securities Act. The registration of these shares of ourcommon stock under the Securities Act would result in these shares becoming eligible for sale in thepublic market without restriction under the Securities Act immediately upon the effectiveness of suchregistration, subject to the Rule 144 limitations applicable to affiliates. See the section titled“Description of Capital Stock—Registration Rights” for a description of these registration rights.

Registration Statement

After the completion of this offering, we intend to file a registration statement on Form S-8 underthe Securities Act to register all of the shares of our common stock subject to equity awardsoutstanding or reserved for issuance under our equity compensation plans. The shares of our commonstock covered by this registration statement will be eligible for sale in the public market without

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restriction under the Securities Act immediately upon the effectiveness of such registration statement,subject to vesting restrictions, the conditions of Rule 144 applicable to affiliates, and any applicablemarket standoff agreements and lock-up agreements. See the section titled “ExecutiveCompensation—Employee Benefit and Stock Plans” for a description of our equity compensationplans.

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MATERIAL U.S. FEDERAL INCOME TAX CONSEQUENCES TONON-U.S. HOLDERS OF OUR CLASS A COMMON STOCK

The following is a summary of the material U.S. federal income tax consequences to certain non-U.S. holders (as defined below) of the ownership and disposition of our Class A common stock butdoes not purport to be a complete analysis of all the potential tax considerations relating thereto. Thissummary is based upon the provisions of the Internal Revenue Code of 1986, as amended, or theCode, Treasury regulations promulgated thereunder, administrative rulings and judicial decisions, all asof the date hereof. These authorities may be changed, possibly retroactively, so as to result in U.S.federal income tax consequences different from those set forth below.

This summary does not address the tax considerations arising under the laws of any non-U.S.,state or local jurisdiction, or under U.S. federal gift and estate tax laws, except to the limited extent setforth below. In addition, this discussion does not address tax considerations applicable to a non-U.S.holder’s particular circumstances or non-U.S. holders that may be subject to special tax rules,including, without limitation:

• banks, insurance companies or other financial institutions (except to the extent specifically setforth below), regulated investment companies or real estate investment trusts;

• persons subject to the alternative minimum tax or net investment income tax;

• tax-exempt organizations or governmental organizations;

• controlled foreign corporations, passive foreign investment companies and corporations thataccumulate earnings to avoid U.S. federal income tax;

• brokers or dealers in securities or currencies;

• traders in securities or other persons that elect to use a mark-to-market method of accountingfor their holdings in our stock;

• persons that own, or are deemed to own, more than five percent of our capital stock (except tothe extent specifically set forth below);

• U.S. expatriates and certain former citizens or long-term residents of the United States;

• partnerships or entities classified as partnerships for U.S. federal income tax purposes or otherpass-through entities (and investors therein);

• persons who hold our Class A common stock as a position in a hedging transaction, “straddle,”“conversion transaction” or other risk reduction transaction or integrated investment;

• persons who hold or receive our Class A common stock pursuant to the exercise of anyemployee stock option or otherwise as compensation;

• persons who do not hold our Class A common stock as a capital asset within the meaning ofSection 1221 of the Code; or

• persons deemed to sell our Class A common stock under the constructive sale provisions ofthe Code.

In addition, if a partnership or entity classified as a partnership for U.S. federal income taxpurposes holds our Class A common stock, the tax treatment of a partner generally will depend on thestatus of the partner and upon the activities of the partnership. Accordingly, partnerships that hold ourClass A common stock, and partners in such partnerships, should consult their tax advisors.

You are urged to consult your tax advisor with respect to the application of the U.S.federal income tax laws to your particular situation, as well as any tax consequences of the

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purchase, ownership and disposition of our Class A common stock arising under the U.S.federal estate or gift tax rules or under the laws of any state, local, non-U.S., or other taxingjurisdiction or under any applicable tax treaty.

Non-U.S. Holder Defined

For purposes of this discussion, you are a non-U.S. holder if you are any holder other than:

• an individual citizen or resident of the United States (for U.S. federal income tax purposes);

• a corporation or other entity taxable as a corporation created or organized in the United Statesor under the laws of the United States or any political subdivision thereof or other entity treatedas such for U.S. federal income tax purposes;

• an estate whose income is subject to U.S. federal income tax regardless of its source; or

• a trust (x) whose administration is subject to the primary supervision of a U.S. court and whichhas one or more “U.S. persons” (within the meaning of Section 7701(a)(3) of the Code) whohave the authority to control all substantial decisions of the trust or (y) which has made a validelection to be treated as a U.S. person.

Distributions

As described in the section titled “Dividend Policy,” we have never declared or paid cashdividends on our capital stock and do not anticipate paying any dividends on our capital stock in theforeseeable future. However, if we do make distributions on our Class A common stock, thosepayments will constitute dividends for U.S. tax purposes to the extent paid from our current oraccumulated earnings and profits, as determined under U.S. federal income tax principles. To theextent those distributions exceed both our current and our accumulated earnings and profits, they willconstitute a return of capital and will first reduce your basis in our Class A common stock, but notbelow zero, and then will be treated as gain from the sale of stock as described below under “—Gainon Disposition of Our Class A Common Stock.”

Except as otherwise described below in the sections on effectively connected income (in the nextparagraph), and Backup Withholding and Information Reporting and FATCA, any dividend paid to yougenerally will be subject to U.S. withholding tax either at a rate of 30% of the gross amount of thedividend or such lower rate as may be specified by an applicable income tax treaty. In order to receivea reduced treaty rate, you must provide us with an IRS Form W-8BEN, IRS Form W-8BEN-E or otherappropriate version of IRS Form W-8, including any required attachments and your taxpayeridentification number, certifying qualification for the reduced rate; additionally you will be required toupdate such Forms and certifications from time to time as required by law. A non-U.S. holder of sharesof our Class A common stock eligible for a reduced rate of U.S. withholding tax pursuant to an incometax treaty may obtain a refund of any excess amounts withheld by timely filing an appropriate claim forrefund with the IRS. If the non-U.S. holder holds the stock through a financial institution or other agentacting on the non-U.S. holder’s behalf, the non-U.S. holder will be required to provide appropriatedocumentation to the agent, which then will be required to provide certification to us or our payingagent, either directly or through other intermediaries.

Dividends received by you that are effectively connected with your conduct of a U.S. trade orbusiness (and, if required by an applicable income tax treaty, attributable to a permanent establishmentmaintained by you in the United States) are generally exempt from such withholding tax. In order toobtain this exemption, you must provide us with an IRS Form W-8ECI or other applicable IRS Form W-8, including any required attachments and your taxpayer identification number, certifying qualification

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for the reduced rate; additionally you will be required to update such forms and certifications from timeto time as required by law. Such effectively connected dividends, although not subject to withholdingtax, are includable on your U.S. income tax return and taxed to you at the same graduated ratesapplicable to U.S. persons, net of certain deductions and credits and therefore are generally exemptfrom the 30% gross withholding tax described above. Additionally, you may be exempt from dividendwithholding tax to the extent dividends are treated as “business profits” to you under an applicable taxtreaty and you meet the requirements of such treaty (including in some cases the requirement thatsuch business profits are not attributable to a permanent establishment maintained by you in theUnited States). In order to obtain these exemptions from withholding tax on any dividends we pay, youwill be required to provide us with an IRS Form W-8ECI or other applicable IRS Form W-8. If you are acorporate non-U.S. holder, dividends you receive that are effectively connected with your conduct of aU.S. trade or business may also be subject to a branch profits tax at a rate of 30% or such lower rateas may be specified by an applicable income tax treaty. You should consult your tax advisor regardingany applicable tax treaties that may provide for different rules.

Gain on Disposition of Our Class A Common Stock

Except as otherwise described below in the section on Backup Withholding and InformationReporting and FATCA, you generally will not be subject to U.S. federal income tax on any gain realizedupon the sale or other disposition of our Class A common stock unless:

• the gain is effectively connected with your conduct of a U.S. trade or business (and, if requiredby an applicable income tax treaty, the gain is attributable to a permanent establishmentmaintained by you in the United States);

• you are a non-resident alien individual who is present in the United States for a period orperiods aggregating 183 days or more during the calendar year in which the sale or dispositionoccurs and maintain an office or other fixed place of business in the United States to whichyour gain on your stock is attributable; or

• our Class A common stock constitutes a U.S. real property interest by reason of our status as a“United States real property holding corporation,” or USRPHC, for U.S. federal income taxpurposes at any time within the shorter of the five-year period preceding your disposition of, oryour holding period for, our Class A common stock.

We believe that we are not currently and will not become a USRPHC for U.S. federal income taxpurposes, and the remainder of this discussion so assumes. However, because the determination ofwhether we are a USRPHC depends on the fair market value of our U.S. real property relative to thefair market value of our other business assets, there can be no assurance that we will not become aUSRPHC in the future. Even if we become a USRPHC, however, as long as our Class A commonstock is regularly traded on an established securities market, such Class A common stock will betreated as U.S. real property interests only if you actually or constructively hold more than five percentof such regularly traded Class A common stock at any time during the shorter of the five-year periodpreceding your disposition of, or your holding period for, our Class A common stock.

If you are a non-U.S. holder described in the first bullet above, you will generally be required topay tax on the net gain derived from the sale under regular graduated U.S. federal income tax rates(and a corporate non-U.S. holder described in the first bullet above also may be subject to the branchprofits tax at a 30% rate), unless otherwise provided by an applicable income tax treaty. If you are anon-U.S. holder described in the second bullet above, you will generally be required to pay a flat 30%tax (or such lower rate specified by an applicable income tax treaty) on the gain derived from the sale,which tax may be offset by U.S. source capital losses for the year (provided you have timely filed U.S.federal income tax returns with respect to such losses). You should consult any applicable income taxor other treaties that may provide for different rules.

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Federal Estate Tax

Our Class A common stock beneficially owned by an individual who is not a citizen or resident ofthe United States (as defined for U.S. federal estate tax purposes) at the time of their death willgenerally be includable in the decedent’s gross estate for U.S. federal estate tax purposes, unless anapplicable estate tax treaty provides otherwise.

Backup Withholding and Information Reporting

Generally, we must report annually to the IRS the amount of dividends paid to you, your nameand address and the amount of tax withheld, if any. A similar report will be sent to you. Pursuant toapplicable income tax treaties or other agreements, the IRS may make these reports available to taxauthorities in your country of residence.

Payments of dividends or of proceeds on the disposition of stock made to you may be subject toinformation reporting and backup withholding at a current rate of 28% unless you establish anexemption, for example, by properly certifying your non-U.S. status on an IRS Form W-8BEN, IRSForm W-8BEN-E or another appropriate version of IRS Form W-8.

Backup withholding is not an additional tax; rather, the U.S. federal income tax liability of personssubject to backup withholding will be reduced by the amount of tax withheld. If withholding results in anoverpayment of taxes, a refund or credit may generally be obtained from the IRS, provided that therequired information is furnished to the IRS in a timely manner.

FATCA

The Foreign Account Tax Compliance Act, or FATCA, generally imposes withholding tax at a rateof 30% on dividends on and gross proceeds from the sale or other disposition of our Class A commonstock paid to “foreign financial institutions” (as specially defined under these rules), unless suchinstitution enters into an agreement with the U.S. government to withhold on certain payments and tocollect and provide to the U.S. tax authorities substantial information regarding the U.S. accountholders of such institution (which includes certain equity and debt holders of such institution, as well ascertain account holders that are foreign entities with U.S. owners) or otherwise establishes anexemption. FATCA also generally imposes a U.S. federal withholding tax of 30% on dividends on andgross proceeds from the sale or other disposition of our Class A common stock paid to a “non-financialforeign entities” (as specially defined for purposes of these rules) unless such entity provides thewithholding agent with a certification identifying certain substantial direct and indirect U.S. owners ofthe entity, certifies that there are none or otherwise establishes and certifies to an exemption. Thewithholding provisions under FATCA generally apply to dividends on our Class A common stock, andunder current transition rules, are expected to apply with respect to the gross proceeds from the sale orother disposition of our Class A common stock on or after January 1, 2019. An intergovernmentalagreement between the United States and your country of tax residence may modify the requirementsdescribed in this paragraph. Non-U.S. holders should consult their own tax advisors regarding thepossible implications of this legislation on their investment in our Class A common stock.

Each prospective investor should consult its own tax advisor regarding the particular U.S.federal, state and local and non-U.S. tax consequences of purchasing, holding and disposing ofour Class A common stock, including the consequences of any proposed change in applicablelaws.

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UNDERWRITING

We and the underwriters named below will enter into an underwriting agreement with respect tothe shares being offered. Subject to certain conditions, each underwriter will severally agree topurchase the number of shares indicated in the following table. Goldman, Sachs & Co. and J.P.Morgan Securities LLC are the representatives of the underwriters.

UnderwritersNumber of

Shares

Goldman, Sachs & Co. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .J.P. Morgan Securities LLC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Merrill Lynch, Pierce, Fenner & Smith

Incorporated . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Allen & Company LLC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Barclays Capital Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Jefferies LLC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Canaccord Genuity Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Piper Jaffray & Co. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .William Blair & Company, L.L.C. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13,000,000

The underwriters will be committed to take and pay for all of the shares being offered, if any aretaken, other than the shares covered by the option described below unless and until this option isexercised.

The underwriters will have an option to buy up to an additional 1,950,000 shares from us. Theymay exercise that option for 30 days. If any shares are purchased pursuant to this option, theunderwriters will severally purchase shares in approximately the same proportion as set forth in thetable above.

The following table shows the per share and total underwriting discounts and commissions to bepaid to the underwriters by us. Such amounts are shown assuming both no exercise and full exerciseof the underwriters’ option to purchase 1,950,000 additional shares.

No Exercise Full Exercise

Per Share . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ $Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ $

Shares sold by the underwriters to the public will initially be offered at the initial public offeringprice set forth on the cover of this prospectus. Any shares sold by the underwriters to securities dealersmay be sold at a discount of up to $ per share from the initial public offering price. After theinitial offering of the shares, the representatives may change the offering price and the other sellingterms. The offering of the shares by the underwriters is subject to receipt and acceptance and subjectto the underwriters’ right to reject any order in whole or in part. Sales of shares made outside theUnited States may be made by affiliates of the underwriters.

We, our executive officers, directors and holders of a substantial majority of our common stockand securities convertible into or exchangeable for shares of our common stock have entered into orwill enter into lock-up agreements with the underwriters of this offering under which we and they haveagreed that, subject to certain exceptions, without the prior written consent of Goldman, Sachs & Co.and J.P. Morgan Securities LLC, we and they will not dispose of or hedge any shares or any securitiesconvertible into or exchangeable for shares of our common stock for a period of 180 days after the

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date of this prospectus. The consent of Goldman, Sachs & Co. and J.P. Morgan Securities LLC isrequired to release any of the securities subject to these lock-up agreements. In addition, our executiveofficers, directors and holders of all of our common stock and securities convertible into orexchangeable for shares of our common stock have entered into market standoff agreements with usunder which they have agreed that, subject to certain exceptions, without our consent, they will notdispose of or hedge any shares or any securities convertible into or exchangeable for shares of ourcommon stock for a period of 180 days after the date of this prospectus. We will agree that, without theprior written consent of Goldman, Sachs & Co. and J.P. Morgan Securities LLC, we will not release anyof the securities subject to these market standoff agreements. See “Shares Eligible for Future Sale” fora discussion of certain transfer restrictions.

A prospectus in electronic format may be made available on the web sites maintained by one ormore underwriters, or selling group members, if any, participating in the offering. The underwriters mayagree to allocate a number of shares to underwriters and selling group members for sale to their onlinebrokerage account holders. Internet distributions will be allocated by the representatives tounderwriters and selling group members that may make Internet distributions on the same basis asother allocations.

Prior to the offering, there has been no public market for the shares. The initial public offeringprice will be negotiated among the representatives and us. Among the factors to be considered indetermining the initial public offering price of the shares, in addition to prevailing market conditions, willbe our historical performance, estimates of our business potential and our earnings prospects, anassessment of our management and the consideration of the above factors in relation to marketvaluation of companies in related businesses. Neither we nor the underwriters can assure investorsthat an active trading market will develop for our common shares, or that the shares will trade in thepublic market at or above the initial public offering price.

We have applied to list our Class A common stock on the New York Stock Exchange under thesymbol “MULE”. In order to meet one of the requirements for listing the Class A common stock on theNew York Stock Exchange, the underwriters have undertaken to sell lots of 100 or more shares to aminimum of 400 beneficial holders.

In connection with the offering, the underwriters may purchase and sell shares of Class Acommon stock in the open market. These transactions may include short sales, stabilizing transactionsand purchases to cover positions created by short sales. Short sales involve the sale by theunderwriters of a greater number of shares than they are required to purchase in the offering, and ashort position represents the amount of such sales that have not been covered by subsequentpurchases. A “covered short position” is a short position that is not greater than the amount ofadditional shares for which the underwriters’ option described above may be exercised. Theunderwriters may cover any covered short position by either exercising their option to purchaseadditional shares or purchasing shares in the open market. In determining the source of shares tocover the covered short position, the underwriters will consider, among other things, the price of sharesavailable for purchase in the open market as compared to the price at which they may purchaseadditional shares pursuant to the option described above. “Naked” short sales are any short sales thatcreate a short position greater than the amount of additional shares for which the option describedabove may be exercised. The underwriters must cover any such naked short position by purchasingshares in the open market. A naked short position is more likely to be created if the underwriters areconcerned that there may be downward pressure on the price of our Class A common stock in theopen market after pricing that could adversely affect investors who purchase in the offering. Stabilizingtransactions consist of various bids for or purchases of common stock made by the underwriters in theopen market prior to the completion of the offering.

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The underwriters may also impose a penalty bid. This occurs when a particular underwriterrepays to the underwriters a portion of the underwriting discount received by it because therepresentatives have repurchased shares sold by or for the account of such underwriter in stabilizing orshort covering transactions.

Purchases to cover a short position and stabilizing transactions, as well as other purchases bythe underwriters for their own accounts, may have the effect of preventing or retarding a decline in themarket price of our stock, and together with the imposition of the penalty bid, may stabilize, maintain orotherwise affect the market price of our common stock. As a result, the price of our Class A commonstock may be higher than the price that otherwise might exist in the open market. The underwriters arenot required to engage in these activities and may end any of these activities at any time. Thesetransactions may be effected on the New York Stock Exchange, in the over-the-counter market orotherwise.

The underwriters do not expect sales to discretionary accounts to exceed five percent of the totalnumber of shares offered.

We estimate that our share of the total expenses of the offering, excluding underwriting discountsand commissions, will be approximately $3.7 million. We will agree to reimburse the underwriters forexpenses related to any applicable state securities filings and to the Financial Industry RegulatoryAuthority incurred by them in connection with this offering in an amount up to $25,000.

We will agree to indemnify the several underwriters against certain liabilities, including liabilitiesunder the Securities Act.

The underwriters and their respective affiliates are full service financial institutions engaged invarious activities, which may include sales and trading, commercial and investment banking, advisory,investment management, investment research, principal investment, hedging, market making,brokerage and other financial and non-financial activities and services. Certain of the underwriters andtheir respective affiliates have provided, and may in the future provide, a variety of these services to usand to persons and entities with relationships with us, for which they received or will receive customaryfees and expenses.

In the ordinary course of their various business activities, the underwriters and their respectiveaffiliates, officers, directors and employees may purchase, sell or hold a broad array of investmentsand actively trade securities, derivatives, loans, commodities, currencies, credit default swaps andother financial instruments for their own account and for the accounts of their customers, and suchinvestment and trading activities may involve or relate to assets, securities and/or instruments of ours(directly, as collateral securing other obligations or otherwise) and/or persons and entities withrelationships with us. The underwriters and their respective affiliates may also communicateindependent investment recommendations, market color or trading ideas and/or publish or expressindependent research views in respect of such assets, securities or instruments and may at any timehold, or recommend to clients that they should acquire, long and/or short positions in such assets,securities and instruments.

Other than in the United States, no action has been taken by us or the underwriters that wouldpermit a public offering of the securities offered by this prospectus in any jurisdiction where action forthat purpose is required. The securities offered by this prospectus may not be offered or sold, directlyor indirectly, nor may this prospectus or any other offering material or advertisements in connectionwith the offer and sale of any such securities be distributed or published in any jurisdiction, exceptunder circumstances that will result in compliance with the applicable rules and regulations of thatjurisdiction. Persons into whose possession this prospectus comes are advised to inform themselves

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about and to observe any restrictions relating to the offering and the distribution of this prospectus.This prospectus does not constitute an offer to sell or a solicitation of an offer to buy any securitiesoffered by this prospectus in any jurisdiction in which such an offer or a solicitation is unlawful.

European Economic Area

In relation to each Member State of the European Economic Area which has implemented theProspectus Directive (each, a “Relative Member State”) an offer to the public of our Class A commonstock may not be made in that Relevant Member State, except that an offer to the public in thatRelevant Member State of our Class A common stock may be made at any time under the followingexemptions under the Prospectus Directive:

• To any legal entity which is a qualified investor as defined in the Prospectus Directive;

• To fewer than 150 natural or legal persons (other than qualified investors as defined in theProspectus Directive), subject to obtaining the prior consent of the representatives for any suchoffer; or

• In any other circumstances falling within Article 3(2) of the Prospectus Directive;

provided that no such offer or shares of our Class A common stock shall result in a requirement for thepublication by us or any placement agent of a prospectus pursuant to Article 3 of the ProspectusDirective.

For the purposes of this provision, the expression an “offer to public” in relation to our Class Acommon stock in any Relevant Member State means the communication in any form and by anymeans of sufficient information on the terms of the offer and our Class A common stock to be offeredso as to enable an investor to decide to purchase our Class A common stock, as the same may bevaried in that Member State by any measure implementing the Prospectus Directive in that MemberState, and the expression “Prospectus Directive” means Directive 2003/71/EC (as amended), includingby Directive 2010/73/EU, and includes any relevant implementing measure in the Relevant MemberState.

This European Economic Area selling restriction is in addition to any other selling restrictions setout below.

United Kingdom

In the United Kingdom, this prospectus is only addressed to and directed as qualified investorswho are (i) investment professionals falling within Article 19(5) of the Financial Services and MarketsAct 2000 (Financial Promotion) Order 2005 (the Order); or (ii) high net worth entities and other personsto whom it may lawfully be communicated, falling within Article 49(2)(a) to (d) of the Order (all suchpersons together being referred to as “relevant persons”). Any investment or investment activity towhich this prospectus relates is available only to relevant persons and will only be engaged withrelevant persons. Any person who is not a relevant person should not act or relay on this prospectus orany of its contents.

Canada

The Class A common stock may be sold in Canada only to purchasers purchasing, or deemed tobe purchasing, as principal that are accredited investors, as defined in National Instrument 45-106Prospectus Exemptions or subsection 73.3(1) of the Securities Act (Ontario), and are permitted clients,

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as defined in National Instrument 31-103 Registration Requirements, Exemptions, and OngoingRegistrant Obligations. Any resale of the Class A common stock must be made in accordance with anexemption from, or in a transaction not subject to, the prospectus requirements of applicable securitieslaws.

Securities legislation in certain provinces or territories of Canada may provide a purchaser withremedies for rescission or damages if this prospectus (including any amendment hereto) contains amisrepresentation, provided that the remedies for rescission or damages are exercised by thepurchaser within the time limit prescribed by the securities legislation of the purchaser’s province orterritory. The purchaser should refer to any applicable provisions of the securities legislation of thepurchaser’s province or territory of these rights or consult with a legal advisor.

Pursuant to section 3A.3 of National Instrument 33-105 Underwriting Conflicts (NI 33-105), theunderwriters are not required to comply with the disclosure requirements of NI 33-105 regardingunderwriter conflicts of interest in connection with this offering.

Hong Kong

The Class A common stock may not be offered or sold in Hong Kong by means of any documentother than (i) in circumstances which do not constitute an offer to the public within the meaning of theCompanies (Winding Up and Miscellaneous Provisions) Ordinance (Cap. 32 of the Laws of HongKong) (“Companies (Winding Up and Miscellaneous Provisions) Ordinance”) or which do not constitutean invitation to the public within the meaning of the Securities and Futures Ordinance (Cap. 571 of theLaws of Hong Kong) (“Securities and Futures Ordinance”), or (ii) to “professional investors” as definedin the Securities and Futures Ordinance and any rules made thereunder, or (iii) in other circumstanceswhich do not result in the document being a “prospectus” as defined in the Companies (Winding Upand Miscellaneous Provisions) Ordinance, and no advertisement, invitation or document relating to theClass A common stock may be issued or may be in the possession of any person for the purpose ofissue (in each case whether in Hong Kong or elsewhere), which is directed at, or the contents of whichare likely to be accessed or read by, the public in Hong Kong (except if permitted to do so under thesecurities laws of Hong Kong) other than with respect to shares of Class A common stock which are orare intended to be disposed of only to persons outside Hong Kong or only to “professional investors” inHong Kong as defined in the Securities and Futures Ordinance and any rules made thereunder.

Singapore

This prospectus has not been registered as a prospectus with the Monetary Authority ofSingapore. Accordingly, this prospectus and any other document or material in connection with theoffer or sale, or invitation for subscription or purchase, of the Class A common stock may not becirculated or distributed, nor may the Class A common stock be offered or sold, or be made the subjectof an invitation for subscription or purchase, whether directly or indirectly, to persons in Singaporeother than (i) to an institutional investor (as defined under Section 4A of the Securities and Futures Act,Chapter 289 of Singapore (the “SFA”)) under Section 274 of the SFA, (ii) to a relevant person (asdefined in Section 275(2) of the SFA) pursuant to Section 275(1) of the SFA, or any person pursuant toSection 275(1A) of the SFA, and in accordance with the conditions specified in Section 275 of the SFAor (iii) otherwise pursuant to, and in accordance with the conditions of, any other applicable provision ofthe SFA, in each case subject to conditions set forth in the SFA.

Where the shares of Class A common stock are subscribed or purchased under Section 275 ofthe SFA by a relevant person which is a corporation (which is not an accredited investor (as defined inSection 4A of the SFA)) the sole business of which is to hold investments and the entire share capital

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of which is owned by one or more individuals, each of whom is an accredited investor, the securities(as defined in Section 239(1) of the SFA) of that corporation shall not be transferable for 6 months afterthat corporation has acquired the Class A common stock under Section 275 of the SFA except: (1) toan institutional investor under Section 274 of the SFA or to a relevant person (as defined inSection 275(2) of the SFA), (2) where such transfer arises from an offer in that corporation’s securitiespursuant to Section 275(1A) of the SFA, (3) where no consideration is or will be given for the transfer,(4) where the transfer is by operation of law, (5) as specified in Section 276(7) of the SFA, or (6) asspecified in Regulation 32 of the Securities and Futures (Offers of Investments) (Shares andDebentures) Regulations 2005 of Singapore (“Regulation 32”).

Where the shares of Class A common stock are subscribed or purchased under Section 275 ofthe SFA by a relevant person which is a trust (where the trustee is not an accredited investor (asdefined in Section 4A of the SFA)) whose sole purpose is to hold investments and each beneficiary ofthe trust is an accredited investor, the beneficiaries’ rights and interest (howsoever described) in thattrust shall not be transferable for 6 months after that trust has acquired the Class A common stockunder Section 275 of the SFA except: (1) to an institutional investor under Section 274 of the SFA or toa relevant person (as defined in Section 275(2) of the SFA), (2) where such transfer arises from anoffer that is made on terms that such rights or interest are acquired at a consideration of not less than$200,000 (or its equivalent in a foreign currency) for each transaction (whether such amount is to bepaid for in cash or by exchange of securities or other assets), (3) where no consideration is or will begiven for the transfer, (4) where the transfer is by operation of law, (5) as specified in Section 276(7) ofthe SFA, or (6) as specified in Regulation 32.

Japan

The Class A common stock has not been and will not be registered under the FinancialInstruments and Exchange Act of Japan (Act No. 25 of 1948, as amended), or the FIEA. The Class Acommon stock may not be offered or sold, directly or indirectly, in Japan or to or for the benefit of anyresident of Japan (including any person resident in Japan or any corporation or other entity organizedunder the laws of Japan) or to others for reoffering or resale, directly or indirectly, in Japan or to or forthe benefit of any resident of Japan, except pursuant to an exemption from the registrationrequirements of the FIEA and otherwise in compliance with any relevant laws and regulations of Japan.

Switzerland

The Class A common stock may not be publicly offered in Switzerland and will not be listed onthe SIX Swiss Exchange (the “SIX”) or on any other stock exchange or regulated trading facility inSwitzerland. This document has been prepared without regard to the disclosure standards for issuanceprospectuses under art. 652a or art. 1156 of the Swiss Code of Obligations or the disclosure standardsfor listing prospectuses under art. 27 ff. of the SIX Listing Rules or the listing rules of any other stockexchange or regulated trading facility in Switzerland. Neither this document nor any other offering ormarketing material relating to the Class A common stock or the offering may be publicly distributed orotherwise made publicly available in Switzerland.

Neither this document nor any other offering or marketing material relating to the offering, us, orthe Class A common stock have been or will be filed with or approved by any Swiss regulatoryauthority. In particular, this document will not be filed with, and the offer of our Class A common stockwill not be supervised by, the Swiss Financial Market Supervisory Authority (“FINMA”), and the offer ofour Class A common stock has not been and will not be authorized under the Swiss Federal Act onCollective Investment Schemes (the “CISA”). The investor protection afforded to acquirers of interestsin collective investment schemes under the CISA does not extend to acquirers of our Class A commonstock.

154

Dubai International Financial Centre

This prospectus relates to an Exempt Offer in accordance with the Offered Securities Rules of theDubai Financial Services Authority (the “DFSA”). This prospectus is intended for distribution only topersons of a type specified in the Offered Securities Rules of the DFSA. It must not be delivered to, orrelied on by, any other person. The DFSA has no responsibility for reviewing or verifying anydocuments in connection with Exempt Offers. The DFSA has not approved this prospectus nor takensteps to verify the information set forth herein and has no responsibility for the prospectus. The Class Acommon stock to which this prospectus relates may be illiquid and/or subject to restrictions on theirresale. Prospective purchasers of the Class A common stock offered should conduct their own duediligence on the Class A common stock. If you do not understand the contents of this prospectus youshould consult an authorized financial advisor.

155

LEGAL MATTERS

Wilson Sonsini Goodrich & Rosati, P.C., Palo Alto, California, which has acted as our counsel inconnection with this offering, will pass upon the validity of the shares of our Class A common stockbeing offered by this prospectus. As of the date of this prospectus, an investment fund associated withWilson Sonsini Goodrich & Rosati, P.C. beneficially owns 110,584 shares of our convertible preferredstock, which will be converted and reclassified into 110,584 shares of our Class B common stock uponcompletion of this offering and represents approximately 0.1% of the outstanding shares of ourcommon stock as of December 31, 2016. Goodwin Procter LLP, Menlo Park, California has acted ascounsel to the underwriters in connection with this offering.

EXPERTS

The consolidated financial statements as of December 31, 2015 and 2016 and for each of theyears in the three-year period ended December 31, 2016 included in this prospectus have been soincluded in reliance on the report of KPMG LLP, an independent registered public accounting firm,given on the authority of said firm as experts in accounting and auditing.

WHERE YOU CAN FIND ADDITIONAL INFORMATION

We have filed with the SEC a registration statement on Form S-1 under the Securities Act withrespect to the shares of our Class A common stock offered by this prospectus. This prospectus, whichconstitutes a part of the registration statement, does not contain all of the information set forth in theregistration statement, some of which is contained in exhibits to the registration statement as permittedby the rules and regulations of the SEC. For further information with respect to us and our commonstock, we refer you to the registration statement, including the exhibits filed as a part of the registrationstatement. Statements contained in this prospectus concerning the contents of any contract or anyother document is not necessarily complete. If a contract or document has been filed as an exhibit tothe registration statement, please see the copy of the contract or document that has been filed. Eachstatement in this prospectus relating to a contract or document filed as an exhibit is qualified in allrespects by the filed exhibit. You may obtain copies of this information by mail from the PublicReference Section of the SEC, 100 F Street, N.E., Room 1580, Washington, D.C. 20549, at prescribedrates. You may obtain information on the operation of the public reference rooms by calling the SEC at1-800-SEC-0330. The SEC also maintains an Internet website that contains reports, proxy statementsand other information about issuers, like us, that file electronically with the SEC. The address of thatwebsite is www.sec.gov.

As a result of this offering, we will become subject to the information and reporting requirementsof the Exchange Act and, in accordance with this law, will file periodic reports, proxy statements andother information with the SEC. These periodic reports, proxy statements and other information will beavailable for inspection and copying at the SEC’s public reference facilities and the website of the SECreferred to above. We also maintain a website at www.mulesoft.com. Upon the completion of thisoffering, you may access these materials free of charge as soon as reasonably practicable after theyare electronically filed with, or furnished to, the SEC. Information contained on our website is not a partof this prospectus, and the inclusion of our website address in this prospectus is an inactive textualreference only.

156

MULESOFT, INC.

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

Page

Report of Independent Registered Public Accounting Firm . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-2Consolidated Balance Sheets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-3Consolidated Statements of Operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-4Consolidated Statements of Comprehensive Loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-5Consolidated Statements of Stockholders’ Equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-6Consolidated Statements of Cash Flows . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-7Notes to Consolidated Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-8

F-1

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

The Board of Directors and ShareholdersMuleSoft, Inc.:

We have audited the accompanying consolidated balance sheets of MuleSoft, Inc. andsubsidiaries as of December 31, 2015 and 2016, and the related consolidated statements ofoperations, comprehensive loss, stockholders’ equity, and cash flows for each of the years in the three-year period ended December 31, 2016. These consolidated financial statements are the responsibilityof the Company’s management. Our responsibility is to express an opinion on these consolidatedfinancial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company AccountingOversight Board (United States). Those standards require that we plan and perform the audit to obtainreasonable assurance about whether the financial statements are free of material misstatement. Anaudit includes examining, on a test basis, evidence supporting the amounts and disclosures in thefinancial statements. An audit also includes assessing the accounting principles used and significantestimates made by management, as well as evaluating the overall financial statement presentation.We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in allmaterial respects, the financial position of MuleSoft, Inc. and subsidiaries as of December 31, 2015and 2016, and the results of their operations and their cash flows for each of the years in the three-year period ended December 31, 2016, in conformity with U.S. generally accepted accountingprinciples.

/s/ KPMG LLP

Santa Clara, CaliforniaFebruary 17, 2017

F-2

MULESOFT, INC.

Consolidated Balance Sheets(In thousands, except share and per share data)

December 31,

Pro Formaas of

December 31,

2015 2016 2016

(Unaudited)ASSETSCURRENT ASSETS:

Cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 19,825 $ 35,101Investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57,359 63,361Trade receivables, net of allowance for doubtful accounts of $240 and $446 as of

December 31, 2015 and 2016 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47,423 72,324Prepaid expenses and other current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10,022 18,854

Total current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 134,629 189,640Investments, noncurrent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33,434 4,151Property and equipment, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,265 5,231Restricted cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,558 671Goodwill . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 596 787Intangible assets, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 249 1,797Other assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 318 661

TOTAL ASSETS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 174,049 $ 202,938

LIABILITIES AND STOCKHOLDERS’ EQUITYCURRENT LIABILITIES:

Accounts payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 725 $ 1,879Accrued expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,389 7,797Accrued compensation and related expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11,664 16,369Deferred revenue, current . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 78,617 130,045

Total current liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 97,395 156,090Deferred revenue, noncurrent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,905 5,569Other liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 79 1,176

TOTAL LIABILITIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 101,379 162,835

Commitments and contingenciesSTOCKHOLDERS’ EQUITY:

Convertible preferred stock, $0.000025 par value; 90,296,190 shares authorized;90,262,270 and 86,030,961 shares issued and outstanding at December 31,2015 and 2016; aggregate liquidation preference of $259,400 and $258,443 atDecember 31, 2015 and 2016; no shares issued and outstanding as ofDecember 31, 2016, pro forma . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 256,903 255,946 $ —

Common stock, $0.000025 par value; 144,000,000 shares authorized, 18,827,795and 26,960,616 shares issued and outstanding at December 31, 2015 and2016; 112,991,577 shares issued and outstanding as of December 31, 2016,pro forma . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 1 3

Additional paid-in capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,390 22,241 278,185Accumulated deficit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (186,631) (236,230) (236,230)Accumulated other comprehensive loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (993) (1,855) (1,855)

TOTAL STOCKHOLDERS’ EQUITY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72,670 40,103 $ 40,103

TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 174,049 $ 202,938

See accompanying notes to consolidated financial statements.

F-3

MULESOFT, INC.

Consolidated Statements of Operations(In thousands, except share and per share data)


2014 2015 2016

Revenue:Subscription and support . . . . . . . . . . . . . . . . . . . . . . . . . $ 48,436 $ 88,096 $ 152,843Professional services and other . . . . . . . . . . . . . . . . . . . . 9,181 22,156 34,904

Total revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57,617 110,252 187,747Cost of revenue:

Subscription and support . . . . . . . . . . . . . . . . . . . . . . . . . 5,304 7,525 13,722Professional services and other . . . . . . . . . . . . . . . . . . . . 11,509 24,645 35,341

Total cost of revenue . . . . . . . . . . . . . . . . . . . . . . . . 16,813 32,170 49,063

Gross profit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40,804 78,082 138,684Operating expenses:

Research and development . . . . . . . . . . . . . . . . . . . . . . . 17,046 24,725 32,862Sales and marketing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58,676 93,057 122,630General and administrative . . . . . . . . . . . . . . . . . . . . . . . 11,911 24,368 31,577

Total operating expenses . . . . . . . . . . . . . . . . . . . . . 87,633 142,150 187,069

Loss from operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (46,829) (64,068) (48,385)Interest income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49 220 465Other expense, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (248) (729) (340)

Net loss before provision for income taxes . . . . . . . . . . . . . . . (47,028) (64,577) (48,260)Provision for income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . 728 862 1,339

Net loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ (47,756) $ (65,439) $ (49,599)

Net loss attributable to common stockholders . . . . . . . . . . . . $ (47,756) $ (65,439) $ (59,035)

Net loss per share attributable to common stockholders,basic and diluted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ (3.07) $ (3.57) $ (2.73)

Weighted-average shares used in computing net loss pershare attributable to common stockholders, basic anddiluted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15,531,314 18,324,048 21,623,610

Pro forma net loss per common share, basic and diluted(unaudited) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ (0.45)

Weighted-average shares used in computing pro forma netloss per common share, basic and diluted (unaudited) . . . 110,919,770


F-4

MULESOFT, INC.

Consolidated Statements of Comprehensive Loss(In thousands)


2014 2015 2016

Net loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $(47,756) $(65,439) $(49,599)Other comprehensive loss:

Foreign currency translation adjustments, net . . . . . . . . . . . . . . . . (208) (355) (1,112)Unrealized gains (losses) on investments . . . . . . . . . . . . . . . . . . . — (308) 250

Other comprehensive loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . (208) (663) (862)

Comprehensive loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $(47,964) $(66,102) $(50,461)


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F-6

MULESOFT, INC.

Consolidated Statements of Cash Flows(In thousands, except per share data)


2014 2015 2016

CASH FLOWS FROM OPERATING ACTIVITIES:Net loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $(47,756) $ (65,439) $(49,599)Adjustments to reconcile net loss to net cash used in operating activities:

Stock-based compensation expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,429 3,318 6,552Other non-cash compensation related to 2016 Tender Offer . . . . . . . . . . . . . . . . . . . . . . . . — — 9,948Depreciation and amortization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,097 1,221 1,949Amortization of investment premiums . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — 562 559Provision for doubtful accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42 (17) 206Loss on disposal of property and equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 177 6Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — — 13Changes in assets and liabilities:

Trade receivables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (15,992) (21,143) (25,106)Prepaid expenses and other current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (2,134) (6,455) (6,836)Other assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 146 (217) (343)Accounts payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,220 (1,286) 1,090Accrued expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 652 1,619 1,127Accrued compensation and related expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,228 5,011 4,705Other liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (9) (80) 1,096Deferred revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19,424 35,595 51,931

Net cash used in operating activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (39,647) (47,134) (2,702)

CASH FLOWS FROM INVESTING ACTIVITIES:Purchases of investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — (106,164) (41,214)Sales of investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — 5,000 24,536Maturities of investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — 9,500 39,650Restricted cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (44) (2,034) 1,887Purchase of intangible assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — (75) —Purchases of property and equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (2,106) (1,506) (4,501)Cash paid for acquisition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — — (1,000)

Net cash (used in) provided by investing activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . (2,150) (95,279) 19,358

CASH FLOWS FROM FINANCING ACTIVITIES:Proceeds from issuance of preferred stock, net of issuance costs . . . . . . . . . . . . . . . . . . . 50,415 126,326 —Repurchase of common shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — (15,901) (3,208)Proceeds from issuance of common stock upon exercise of options and warrants . . . . . . 469 1,884 4,281Tax benefits from employee stock plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 79 154 321Payment of deferred offering costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — — (1,730)

Net cash provided by (used in) financing activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50,963 112,463 (336)

Impact of foreign exchange on cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (300) (322) (1,044)

Net increase (decrease) in cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8,866 (30,272) 15,276Cash and cash equivalents—Beginning of year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41,231 50,097 19,825

Cash and cash equivalents—End of year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 50,097 $ 19,825 $ 35,101

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:Cash paid for income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 286 $ 895 $ 764

SUPPLEMENTAL DISCLOSURES OF NON-CASH INVESTING AND FINANCINGINFORMATION:

Deemed dividends on preferred stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ — $ — $ 9,436

Liability for purchase of property and equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 83 $ 72 $ 91

Deferred offering costs in accrued expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ — $ — $ 266

See accompanying notes to consolidated financial statements

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MULESOFT, INC.

Notes to Consolidated Financial Statements

1. Organization and Description of Business

MuleSoft, Inc. (“we” or “our”) was incorporated in the state of Delaware on April 12, 2006. Weprovide a single, unified platform that allows customers to connect their applications, data and devicesand to enable a self-serve infrastructure through discoverable building blocks that can be used andreused to rapidly compose applications. Our customers use these building blocks to connect theirSaaS applications, on-premises applications, cloud deployments, mobile devices and data into an“application network.” With an application network built with Anypoint Platform, organizations cantransform into composable enterprises. We are the sole owner of the MuleSoft source code and allMuleSoft trademarks.

We have subsidiaries in Argentina, Australia, Canada, Germany, Hong Kong, the Netherlands,New Zealand, Singapore, and the United Kingdom.

2. Summary of Significant Accounting Policies

Basis of Presentation

The consolidated financial statements have been prepared in accordance with generally acceptedaccounting principles in the United States (GAAP), and include our accounts and those of our whollyowned subsidiaries. All intercompany balances and transactions have been eliminated uponconsolidation.

Unaudited Pro Forma Financial Information

The unaudited pro forma consolidated financial information as of December 31, 2016 presentsour consolidated stockholders’ equity information assuming the conversion and reclassification of all ofour outstanding shares of convertible preferred stock into shares of Class B common stock upon theclosing of a firm commitment underwritten initial public offering (IPO) for the sale of our Class Acommon stock, provided that the pre-money valuation of such offering is equal to at least$135.0 million and the aggregate gross proceeds to us are in excess of $50.0 million. The unauditedpro forma consolidated financial information does not assume any proceeds from the proposed IPO.

Use of Estimates

The preparation of consolidated financial statements in conformity with GAAP requiresmanagement to make estimates and assumptions that affect the reported amounts of assets andliabilities and disclosure of contingent assets and liabilities at the date of the financial statements andthe reported amounts of revenue and expenses during the reporting period. Management periodicallyevaluates such estimates and assumptions for continued reasonableness. In particular, we makeestimates with respect to the fair value allocation of multiple elements in revenue recognition, theuncollectible accounts receivable, valuation of long-lived assets, stock-based compensation expenseand income taxes. Appropriate adjustments, if any, to the estimates used are made prospectivelybased upon such periodic evaluation. Actual results could differ from those estimates.

Segments

We operate as one operating segment. Operating segments are defined as components of anenterprise for which separate financial information is evaluated regularly by the chief operating decision

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MULESOFT, INC.


maker, who is the chief executive officer, in deciding how to allocate resources and assessingperformance. While we have offerings in multiple market segments, our business operates in oneoperating segment because our chief operating decision maker evaluates our financial information andresources and assesses the performance of these resources on a consolidated basis. Since weoperate in one operating segment, all required financial segment information can be found in theconsolidated financial statements.

Foreign Currency Translation

The functional currency of our non-U.S. subsidiaries is the local currency. Asset and liabilitybalances denominated in non-U.S. dollar currencies are translated into U.S. dollars using period-endexchange rates, while revenue and expenses are based upon the exchange rate at the time of thetransaction, if known, or at the average rate for the period. Differences are included in stockholders’equity as a component of accumulated other comprehensive loss. Financial assets and liabilitiesdenominated in currencies other than the functional currency are recorded at the exchange rate at thetime of the transaction and subsequent gains and losses related to changes in the foreign currency areincluded in other income (expense), net in the accompanying consolidated statements of operations.

Cash and Cash Equivalents

We consider all highly liquid investments with an original maturity of three months or less fromdate of purchase to be cash equivalents.

Restricted Cash

Restricted cash at December 31, 2015 and 2016 includes $2.2 million and $308,000,respectively, which is used as collateral for letters of credit and bank guarantees issued in relation tocertain leases and $362,000 and $364,000, respectively, of collateral used to secure credit cards whichmay not be used or transferred until the restriction is released by the issuing bank. One letter of creditexpired during 2016 resulting in the release of $2.0 million from restricted cash.

Fair Value of Financial Instruments

Assets and liabilities recorded at fair value in the financial statements are categorized based uponthe level of judgment associated with the inputs used to measure their fair value. Hierarchical levelswhich are directly related to the amount of subjectivity associated with the inputs to the valuation ofthese assets or liabilities are as follows:

• Level 1: Observable inputs that reflect quoted prices (unadjusted) for identical assets orliabilities in active markets.

• Level 2: Observable inputs, other than Level 1 prices, such as quoted prices for similar assetsor liabilities, quoted prices in markets that are not active or other inputs that are observable orcan be corroborated by observable market data for substantially the full term of the assets orliabilities.

• Level 3: Unobservable inputs reflecting our own assumptions incorporated in valuationtechniques used to determine fair value. These assumptions are required to be consistent withmarket participant assumptions that are reasonably available.

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MULESOFT, INC.


For certain financial instruments, including cash and cash equivalents, accounts receivable andpayable, as well as certain accrued liabilities, the recorded amount approximates estimated fair valuedue to their relatively short maturity period.

Short-term investments consist of investments in marketable equity securities that are classifiedas available-for-sale and recognized at fair value using Level 1 and Level 2 inputs.

Concentration of Credit and Other Risks

Financial instruments that potentially subject us to concentration of credit risk consist principallyof trade receivables. Our trade receivables mainly result from subscription to our software products andprofessional services provided to our customers that are located primarily in the United States andWestern Europe. We review the need for allowances for potential losses from these trade receivables.At December 31, 2015 and 2016, the allowance for doubtful accounts was $240,000, and $446,000,respectively. No single customer accounted for ten percent or more of trade receivables as ofDecember 31, 2015 and 2016. No single customer accounted for ten percent or more of total revenuefor the years ended December 31, 2014, 2015, and 2016.

We are dependent upon third parties, such as Amazon Web Services, in order to meet the uptimeand performance requirements of our customers.

Deferred Offering Costs

Deferred offering costs, primarily consisting of legal, accounting, printer, and other direct fees andcosts related to the proposed initial public offering, are capitalized. The deferred offering costs will beoffset against proceeds from our planned initial public offering upon the closing of the offering. In theevent the offering is terminated, all of the deferred offering costs will be expensed. As of December 31,2016, we capitalized $2.0 million of deferred offering costs recorded in prepaid expenses and othercurrent assets. There were no such costs capitalized as of December 31, 2015.

Property and Equipment, Net

Property and equipment are stated at cost, net of accumulated depreciation and amortization.Depreciation and amortization are computed using the straight-line method based on the estimateduseful lives of three years for assets other than leasehold improvements. Leasehold improvements areamortized on a straight-line basis over the shorter of the lease term or estimated useful life of theassets; generally three years.

Goodwill and Intangible Assets

Goodwill is measured as the excess of consideration transferred and the fair value of net assetsacquired and liabilities assumed in a business combination.

Goodwill is not amortized, but is tested for impairment at least annually or as circumstancesindicate that its value may no longer be recoverable. To assess if goodwill is impaired, we first performa qualitative assessment to determine whether further impairment testing is necessary. If, as a result ofthe qualitative assessment, we consider it more likely than not that the fair value of a reporting unit isless than its carrying amount, we perform a quantitative impairment test. This includes a screening forimpairment and, in a second step, the measuring of such impairment.

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MULESOFT, INC.


We perform our goodwill impairment test annually in the fourth fiscal quarter, and the lastimpairment test was completed for the year ended December 31, 2016 and it was determined that thefair value was significantly in excess of the carrying value.

The guidance for goodwill and other intangible assets requires impairment testing based onreporting units. We periodically reevaluate the business and determined that we continue to operate inone segment, which is also considered the sole reporting unit. Therefore, goodwill was tested and willcontinue to be tested for impairment at the consolidated level. To date, we have determined that therehas been no impairment of goodwill.

Impairment of Long-Lived Assets

Our long-lived assets, such as property and equipment and intangibles, are reviewed forimpairment whenever events or changes in circumstances indicate that the carrying amount of anasset or asset group may not be recoverable. Recoverability of assets to be held and used ismeasured by comparison of the carrying amount of an asset group to estimated undiscounted futurecash flows expected to be generated by the asset group. If the carrying amount of an asset groupexceeds its estimated future cash flows, an impairment charge is recognized in the amount by whichthe carrying amount of the asset group exceeds the fair value of the asset group. There were noimpairment charges for any of the periods presented.

Software Development Costs

Development costs included in the research and development of new software products areexpensed as incurred until technological feasibility of the product has been established. Softwaredevelopment costs incurred after technological feasibility has been established are capitalized up tothe time the product is available for general release to customers. For the years ended December 31,2015 and 2016, there were no amounts capitalized as our current development process is essentiallycompleted concurrent with the establishment of technological feasibility.

We incur costs related to software acquired, developed or modified solely to meet our internalrequirements. Costs incurred during the preliminary planning and evaluation stage of the project andduring the post implementation operational stage are expensed as incurred. Costs incurred during theapplication development stage of the project are capitalized. We define the design, configuration, andcoding process as the application development stage. We did not capitalize any costs related tocomputer software developed for internal use during the years ended December 31, 2014, 2015, and2016.

Revenue Recognition

We recognize revenue from the following sources: (1) subscription and support revenue, which iscomprised of subscription fees from customers accessing our cloud-hosted software and fromterm-based licenses of our software and support services; (2) professional services and other revenue,which consists primarily of fees associated with consulting and training services related to theimplementation and configuration of our platform and (3) royalty revenue from customers incorporatingour software in their products.

On sales through our channel partners, we recognize revenue on a “sell in” basis as our contractualrelationships with our channel partners do not depend on the sale of our products and services to their

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MULESOFT, INC.


customers and payment from the channel partner is not contingent on receiving payment from the endcustomer. The contractual relationships with our channel partners do not allow returns, rebates, or priceconcessions.

We recognize revenue net of sales taxes and other applicable taxes when all of the followingcriteria are met: there is persuasive evidence of an arrangement, delivery has occurred or service hasbeen performed, the fee is fixed or determinable, and collectability is probable.

Subscription Revenue from Cloud-Hosted Software

Subscription revenue from cloud-hosted software is recognized ratably over the subscriptionperiod.

Subscription and Support Revenue from Software Licenses

Software licenses for our enterprise software are sold with support services and are generallyoffered with one-year base subscription periods. The base license subscription generally entitles theend user to the technology itself and post-contract customer support consisting of a specified level ofcustomer support bug fixes, functionality enhancements to the technology, and upgrades to newversions of the technologies, each on a when-and-if available basis, during the term of thesubscription. Revenue is recorded ratably over the subscription term as we have not establishedvendor-specific objective evidence (VSOE) for such offerings.

Professional Services and Other Revenue

Professional services and other revenue is comprised of revenue earned for consulting andtraining services related to the implementation and configuration of our platform and royalty revenue.Professional services revenue is generally recognized as the services are rendered for time andmaterial contracts, or on a proportional performance basis for fixed price contracts. The majority of ourprofessional services contracts are on a time and materials basis and have standalone value. Forprofessional services that are part of a multiple-element software arrangement, where VSOE of fairvalue does not exist for all undelivered elements, the professional services revenue is recognized overthe term of the subscription.

We classify reimbursements received from customers for out-of-pocket expenses as acomponent of revenue.

Royalty revenue is comprised of royalty fees received from customers who have our productsincorporated in their own products. Revenue is recognized when the sale to the end customer isreported to us.

Multiple-Element Arrangements

For multiple-element arrangements containing cloud hosted subscription and non-softwareservices, we: (1) determine whether each element constitutes a separate unit of accounting;(2) determine the fair value of each element using the selling price hierarchy of VSOE of selling price,third party evidence (TPE) of selling price or best estimated selling price (BESP), as applicable; and (3)allocate the total non-contingent fee to each separate unit of accounting based on the relative selling

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MULESOFT, INC.


price method. An element constitutes a separate unit of accounting when the delivered item hasstandalone value and delivery of the undelivered element is probable and within our control. As wehave been unable to establish VSOE or TPE for the elements of our arrangements, we determineBESP by considering overall pricing objectives and market conditions. Significant pricing practicestaken into consideration include our discounting practices, the size and volume of our transactions, ourprice lists, our go-to-market strategy, historical standalone sales, and contract prices. As our go-to-market strategies evolve, the pricing practices may be modified in the future, which could result inchanges in relative selling prices, including BESP, and therefore, the allocation of the selling price toan element. The consideration allocated to subscription and support is recognized as revenue over thecontract period commencing when the subscription service is made available to the customer. Theconsideration allocated to professional services is recognized as revenue using the proportionalperformance method or as services are delivered for time and material contracts. The totalarrangement fee for a multiple element arrangement is allocated based on the relative BESP of eachelement. However, since the professional services are generally completed prior to completion ofdelivery of subscription and support services, the revenue recognized for professional services in agiven reporting period does not include fees subject to delivery of subscription and support services.This results in the recognition of revenue for professional services that is generally no greater than thecontractual fees for those professional services.

For multiple-element arrangements that include only software licenses and software related post-contract support, training, and/or consulting, we allocate and defer revenue for each undeliveredelement of these arrangements based on VSOE. As we have not yet established VSOE of fair value forour software licenses and support, we recognize revenue for these arrangements on a ratable basisover the term of the subscription product with which it is bundled.

We have certain multiple element transactions that include both non-software and softwareelements. For these types of transactions, we allocate the total price to each separate unit ofaccounting based on the relative selling price method described above. For non-software elements, therevenue is recognized when revenue recognition criteria are met for each element. For subscriptionelements, we recognize revenue over the subscription term when revenue recognition criteria havebeen met.

Deferred Revenue

Deferred revenue consists of billing or payments received in advance of revenue recognitiongenerated from subscription to our cloud hosted software, software licenses, and support as well aspayments for unused training and consulting services. Software licenses and subscription to cloudhosted software, support, training, and consulting services are generally paid for in full 30 to 60 daysafter the invoice date.

Cost of Revenue

Cost of revenue for subscription and support revenue consists primarily of cloud-hosting costsand personnel-related costs of our customer support organization, including salaries, commissions,benefits, bonuses and stock-based compensation, as well as contractor costs to supplement our stafflevels, third-party software royalties and allocated overhead.

Cost of revenue for professional services and other revenue consists primarily of personnel-related costs of our professional services and training departments, including salaries, commissions,

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MULESOFT, INC.


benefits, bonuses and stock-based compensation, contractor costs to supplement our staff levels andallocated overhead.


Research and development costs are expensed as incurred. Research and developmentexpenses consist primarily of personnel-related costs for the design and development of our platformand technologies, contractor costs to supplement our staff levels, third-party web services, consultingservices, and allocated overhead.

Advertising Expenses

Advertising costs are expensed when incurred and are included in operating expenses in theaccompanying consolidated statements of operations. Advertising expense was $3.6 million,$4.9 million, and $7.3 million for the years ended December 31, 2014, 2015, and 2016.

Stock-Based Compensation

We measure stock-based compensation cost for equity instruments granted to employees basedupon the estimated fair value of the award at the date of grant and the estimated number of sharesultimately expected to vest. We estimate the fair value of stock options granted using the Black-Scholes option-pricing model, which requires us to estimate expected term, fair value of commonstock, expected volatility, risk-free interest rate, and dividend yield. We use the simplified method indeveloping an estimate of the expected term of the stock options, which is calculated as the average ofthe time to vesting and the contractual life of the options. As our common stock has never beenpublicly traded, the expected volatility is based upon the average historical volatility of several publiclytraded companies in our peer group over a period approximately equal to the expected term of theawards. The risk-free interest rate is based on the average interest rate for U.S. Treasury instrumentswhose term is consistent with the expected term of the options. As we have not declared dividends forany period presented, and do not anticipate doing so in the future, the dividend yield is 0%.

Compensation cost resulting from this valuation is recognized in the consolidated statement ofoperations on a straight-line basis over the period during which an employee provides the requisiteservice in exchange for the award.

Stock-based compensation expense for options granted to nonemployees as consideration forservices received is measured on the date of performance at the fair value of the considerationreceived or the fair value of the equity instruments issued, using the Black-Scholes option-pricingmodel, whichever can be more reliably measured. Stock-based compensation expense related to stockoptions granted to nonemployees is recognized as the stock options are earned. The awards generallyvest ratably over the time period we expect to receive services from the nonemployee. The fair valuesattributable to these options are amortized over the service period and the unvested portion of theseoptions is remeasured at each vesting date.

Income Taxes

Income taxes are accounted for using the asset and liability method. Deferred tax assets andliabilities are recognized for the future tax consequences attributable to differences between the

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MULESOFT, INC.


financial statement carrying amounts or existing assets and liabilities and their respective tax bases.Deferred tax assets and liabilities are measured using the enacted tax rates expected to apply totaxable income in the years in which those temporary differences are expected to be recovered orsettled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in incomein the period of enactment. We record a valuation allowance to reduce deferred tax assets to anamount for which realization is more likely than not.

We measure and recognize tax benefits from uncertain tax positions only if it is more likely thannot that the tax position will be sustained on examination by the tax authorities, based on the merits ofthe position.

Net Loss Per Share Attributable to Common Stockholders

Our basic net loss per share attributable to common stockholders is calculated by dividing the netloss attributable to common stockholders by the weighted-average number of shares of common stockoutstanding for the period, without consideration of potentially dilutive securities. Net loss attributable tocommon stockholders is the same as net loss for the years ended December 31, 2014 and 2015. Forthe year ended December 31, 2016, net loss attributable to common stockholders is calculated as netloss for the period plus the deemed dividend on common stock related to shares of convertiblepreferred stock that was sold by holders following conversion to common stock. The deemed dividendrepresents the excess of the sale price of the converted preferred stock over the fair value of ourcommon stock. Diluted net loss per share attributable to common stockholders is the same as basicnet loss per common share since the effect of potentially dilutive securities is anti-dilutive.

Unaudited Pro Forma Net Loss per Share

The unaudited pro forma basic and diluted net loss per share has been computed to give effect tothe conversion of the shares of convertible preferred stock into common stock as if such conversionhad occurred at the earlier of the beginning of the period or the date of issuance, if later. The unauditedpro forma net loss per share does not include the shares to be sold and related proceeds to bereceived from an IPO.

Commitments and Contingencies

Liabilities for loss contingencies arising from claims, assessments, litigation, fines and penaltiesand other sources are recorded when it is probable that a liability has been or will be incurred and theamount of the liability can be reasonably estimated. Legal costs incurred in connection with losscontingencies are expensed as incurred.

Recently Adopted Accounting Standards

In April 2015, the Financial Accounting Standards Board (FASB) issued ASU 2015-05—Intangibles—Goodwill and Other-Internal-Use Software: Customer’s Accounting for Fees Paid in aCloud Computing Arrangement, which provides guidance on determining whether a cloud computingarrangement contains a software license. If a cloud computing arrangement includes a softwarelicense, then the customer should account for the software license element of the arrangementconsistent with the acquisition of other software licenses. If a cloud computing arrangement does notinclude a software license, the customer should account for the arrangement as a service contract. The

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MULESOFT, INC.


new standard is effective for interim and annual periods beginning after December 15, 2015 and earlyadoption is permitted. We have adopted this standard as of January 1, 2016 and the impact of itsadoption on our consolidated financial statements was not material.

3. Investments

Marketable Securities

The following table summarizes our available-for-sale investments at December 31, 2015 and2016.

December 31, 2015

AmortizedCost

UnrealizedGains

UnrealizedLosses

FairValue

(In thousands)

Corporate bonds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $17,471 $ — $ (74) $17,397U.S. Treasury securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73,630 — (234) 73,396

Total marketable securities . . . . . . . . . . . . . . . . . . . . . . $91,101 $ — $ (308) $90,793

December 31, 2016

AmortizedCost

UnrealizedGains

UnrealizedLosses Fair Value

(In thousands)

Corporate bonds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $24,027 $ — $ (33) $23,994U.S. Treasury securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40,548 — (20) 40,528Foreign bonds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,995 — (5) 2,990

Total marketable securities . . . . . . . . . . . . . . . . . . . . . . $67,570 $ — $ (58) $67,512

The duration of the investments classified as marketable securities is as follows (in thousands):

December 31,2015

December 31,2016

Short-term (due in one year or less) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $57,359 $63,361Long-term (due after one year) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33,434 4,151

Total marketable securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $90,793 $67,512

As of December 31, 2015, the following marketable securities were in an unrealized loss position(in thousands):

Less than 12 months Greater than 12 months Total

FairValue

UnrealizedLosses

FairValue

UnrealizedLosses

FairValue

UnrealizedLosses

Corporate bonds . . . . . . . . . . . . . . . $17,397 $ (74) $ — $ — $17,397 $ (74)U.S. Treasury securities . . . . . . . . . 73,396 (234) — — 73,396 (234)

Total marketable securities . . . $90,793 $ (308) $ — $ — $90,793 $ (308)

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As of December 31, 2016, the following marketable securities were in an unrealized loss position(in thousands):

Less than 12 months Greater than 12 months Total

FairValue

UnrealizedLosses

FairValue

UnrealizedLosses

FairValue

UnrealizedLosses

Corporate bonds . . . . . . . . . . . . . . . $22,342 $(31) $1,652 $ (2) $23,994 $ (33)U.S. Treasury securities . . . . . . . . . 38,029 (20) 2,499 — 40,528 (20)Foreign bonds . . . . . . . . . . . . . . . . . 2,990 (5) — — 2,990 (5)

Total marketable securities . . . $63,361 $(56) $4,151 $ (2) $67,512 $ (58)

We do not believe any of the unrealized losses represent an other-than-temporary impairmentbased on our evaluation of available evidence as of December 31, 2015 and 2016. We expect toreceive the full principal and interest on all of these marketable securities.

Fair Value Measurement

The following table presents information about our assets and liabilities that are measured at fairvalue and indicates the fair value hierarchy of the valuation (in thousands):


AggregateFair Value Level 1 Level 2 Level 3

Assets:Money market . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 11,133 $11,133 $ — $ —Corporate bonds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17,397 — 17,397 —U.S. Treasury securities . . . . . . . . . . . . . . . . . . . . . . . 73,396 — 73,396 —

$101,926 $11,133 $90,793 $ —

Reported as:Cash equivalents(1) . . . . . . . . . . . . . . . . . . . . . . . . . . $ 11,133Investments, current . . . . . . . . . . . . . . . . . . . . . . . . . . 57,359Investments, noncurrent . . . . . . . . . . . . . . . . . . . . . . . 33,434

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $101,926

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AggregateFair Value Level 1 Level 2 Level 3

Assets:Money market . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 3,133 $3,133 $ — $ —Corporate bonds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23,994 — 23,994 —U.S. Treasury securities . . . . . . . . . . . . . . . . . . . . . . . 40,528 — 40,528 —Foreign bonds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,990 — 2,990 —

$70,645 $3,133 $67,512 $ —

Reported As:Cash equivalents(1) . . . . . . . . . . . . . . . . . . . . . . . . . . $ 3,133Investments, current . . . . . . . . . . . . . . . . . . . . . . . . . . 63,361Investments, noncurrent . . . . . . . . . . . . . . . . . . . . . . . 4,151

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $70,645

(1) Included in “cash and cash equivalents” in the accompanying consolidated balance sheet as ofDecember 31, 2015 and 2016, in addition to $8.7 million and $32.0 million of cash, respectively.

4. Property and Equipment, Net

The cost and accumulated depreciation and amortization of property and equipment are asfollows (in thousands):

December 31,

2015 2016

Computers and equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 2,200 $ 3,753Office furniture, fixtures and equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 216 313Software . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 450 457Leasehold improvements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,760 3,037Construction-in-progress . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — 1,596

Property and equipment, gross . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,626 9,156Less: accumulated depreciation and amortization . . . . . . . . . . . . . . . . . . . . (2,361) (3,925)

Total property and equipment, net . . . . . . . . . . . . . . . . . . . . . . . . . $ 2,265 $ 5,231

Depreciation expense was $1.0 million, $1.2 million, and $1.7 million for the years endedDecember 31, 2014, 2015, and 2016, respectively.

5. Goodwill and Intangible Assets

In October 2016, we acquired Express Service Gateway (ESG) for $1.0 million in cash. We planto incorporate ESG’s software into our own. The fair values assigned to assets acquired and liabilitiesassumed are based on management’s best estimates and assumptions as of the reporting date andare considered preliminary pending finalization of the valuation analysis. Pro forma information has notbeen presented as the impact to our consolidated financial statements was not material.

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Total cost and amortization of intangible assets comprised of the following (in thousands):

December 31,

2015 2016

Purchased intangibles . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 399 $2,176Less: accumulated amortization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (150) (379)

Total intangible assets, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 249 $1,797

The amortization expense of the intangible assets was $55,000, $56,000, and $236,000 for theyears ended December 31, 2014, 2015, and 2016, respectively.

The total estimated future amortization expense of these intangible assets as of December 31,2016 is as follows (in thousands):

Year ending:2017 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 7152018 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5982019 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2832020 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 201

Total intangible assets, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $1,797

6. Commitments and Contingencies

Operating Leases

As of December 31, 2016, we leased office space in the United States, Australia, Argentina, theUnited Kingdom, Hong Kong, the Netherlands, Sweden, and Singapore under noncancelable operatingleases with various expiration dates through 2021. In August 2016, we entered into a new leaseagreement to rent office space in Buenos Aires, Argentina. The lease has a five year term, four monthsof free rent and the lease ends in July 2021.

We recognize rent expense on a straight-line basis over the noncancelable lease period andrecord the difference between cash rent payments and the recognition of rent expense as a deferredrent liability. Where leases contain escalation clauses, rent abatements and/or concessions, such asrent holidays and landlord or tenant incentives or allowances, we apply them in the determination ofstraight-line rent expense over the lease period. Rent expense for the years ended December 31,2014, 2015, and 2016 was $2.2 million, $2.9 million, and $4.4 million, respectively. In April 2016, weexpanded and extended our lease at 77 Geary Street, San Francisco, California. Concurrently, weentered into a new lease at 160 Pine Street, San Francisco, California, which we are currentlysubleasing to a tenant. We provided the tenant with incentive payments totaling $435,000 which will bepaid in three installments over the next 12 months. The incentive payments will be amortized over thelife of the tenant’s sublease at 160 Pine Street. We have recognized sublease income of $174,000during the year ended December 31, 2016 in other expense, net and expect to have sublease incomeof $307,000 for the remaining sublease period.

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Our future minimum lease payments are as follows as of December 31, 2016 (in thousands):

Amount

2017 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,2512018 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,6392019 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,6242020 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,7062021 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,350Thereafter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . —

Total future minimum lease payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $17,570

Purchase Obligation

In October 2016, we entered into an addendum to an agreement with our cloud infrastructureprovider for a two-year period ending in September 2018. In connection with the addendum, we mustincur charges of at least $1.4 million each quarter and $9.0 million in each contract year. In 2016, wemade an upfront payment of $9.0 million for the first year of the contract, which is recorded in prepaidexpenses and other current assets in our consolidated balance sheet.

Litigation

We are involved from time to time in claims that arise in the normal course of business. While it isnot feasible to predict or determine the ultimate outcome of these matters, we are not currently subjectto any proceeding that we believe is required to be accrued for in our consolidated financial position orconsolidated results of operations.

Indemnification Arrangements

In the ordinary course of business, we enter into contractual arrangements under which we agreeto provide indemnification of varying scope and terms to customers, business partners and otherparties with respect to certain matters, including, losses arising out of the breach of such agreements,intellectual property infringement claims made by third parties, and other liabilities with respect to ourproducts and services and its business. In these circumstances, payment may be conditional on theother party making a claim pursuant to the procedures specified in the particular contract.

We include service level commitments to our cloud customers warranting certain levels of uptimereliability and performance and permitting those customers to receive credits in the event that we fail tomeet those levels. To date, we have not incurred any material costs as a result of these commitmentsand we expect the time between any potential claims and issuance of the credits to be short. As aresult, we have not accrued any liabilities related to these commitments in our consolidated financialstatements.

In addition, we have indemnification agreements with our directors and our executive officers thatrequire us, among other things, to indemnify them against certain liabilities that may arise by reason oftheir status or service as directors or officers.

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7. Stockholders’ Equity

Convertible Preferred Stock

Convertible preferred stock as of December 31, 2015 consisted of the following (in thousands,except share and per share amounts):

ConvertiblePreferredStock: Date Issued

OriginalIssuePrice

SharesAuthorized

SharesIssued and

OutstandingLiquidationPreference

Net Proceedsafter Issuance

Costs

DividendRate Per

Share

Series A . . . August 2006 $ 0.23 17,914,408 17,914,408 $ 4,050 $ 4,015 $ 0.02Series B . . . May 2007 0.76 16,400,000 16,366,080 12,500 12,420 0.06Series C . . . March 2010 0.78 15,484,092 15,484,092 12,000 11,901 0.06Series D . . . February 2012 1.58 9,481,804 9,481,804 15,000 14,944 0.13Series E . . . February and

March 20133.12 11,851,905 11,851,905 37,000 36,882 0.25

Series F . . . March 2014 6.53 7,736,448 7,736,448 50,550 50,415 0.52Series G . . . May 2015 11.23 11,427,533 11,427,533 128,300 126,326 0.90

90,296,190 90,262,270 $ 259,400 $ 256,903

Convertible preferred stock as of December 31, 2016 consisted of the following (in thousands,except share and per share amounts):

ConvertiblePreferredStock: Date Issued

OriginalIssuePrice

SharesAuthorized

SharesIssued and

OutstandingLiquidationPreference

Net Proceedsafter Issuance

Costs

DividendRate Per

Share

Series A . . . . August 2006 $ 0.23 17,914,408 13,683,099 $ 3,093 $ 3,058 $ 0.02Series B . . . . May 2007 0.76 16,400,000 16,366,080 12,500 12,420 0.06Series C . . . . March 2010 0.78 15,484,092 15,484,092 12,000 11,901 0.06Series D . . . . February 2012 1.58 9,481,804 9,481,804 15,000 14,944 0.13Series E . . . . February and

March 20133.12 11,851,905 11,851,905 37,000 36,882 0.25

Series F . . . . March 2014 6.53 7,736,448 7,736,448 50,550 50,415 0.52Series G . . . May 2015 11.23 11,427,533 11,427,533 128,300 126,326 0.90

90,296,190 86,030,961 $ 258,443 $ 255,946

Significant provisions of our convertible preferred stock are as follows:

Conversion

Each share of preferred stock shall be convertible at the right and option of the stockholder intosuch number of fully paid and nonassessable shares of common stock as is determined by dividing theoriginal issue price by the conversion price of $0.226075 for Series A preferred stock, $0.76375 forSeries B preferred stock, $0.775 for Series C preferred stock, $1.581975 for Series D preferred stock,$3.12186 for Series E preferred stock, $6.534 for Series F preferred stock, and $11.22726 for Series Gpreferred stock (the Conversion Price). The number of shares of common stock into which each shareof preferred stock may be converted is referred to as the Conversion Rate. Upon any decrease orincrease in the Conversion Price specified for the preferred stock, the Conversion Rate shall beappropriately increased or decreased.

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Each share of preferred stock shall automatically be converted into fully paid, nonassessableshares of common stock at the then effective Conversion Rate specified for such shares of preferredstock (i) immediately prior to the closing of a firm commitment underwritten initial public offeringpursuant to an effective registration statement filed under the Securities Act of 1933, as amended,covering the offer and sale of our common stock, provided that the premoney valuation of such offeringis equal to at least $135.0 million and the aggregate gross proceeds to us are in excess of $50.0million or (ii) upon the receipt by us of a written request for such conversion from the holders of two-thirds of the preferred stock then outstanding, or, if later, the effective date for conversion specified inany such request.

At December 31, 2015 and 2016, we have reserved sufficient shares of common stock forissuance upon conversion of the preferred stock.

Liquidation

In the event of any liquidation (includes a change in control), dissolution, or winding up of ourcompany, either voluntary or involuntary, each stockholder of Series A, B, C, D, E, F, and G preferredstock shall be entitled to receive, prior and in preference to any distribution of any assets or surplusfunds to the holders of common stock, an amount per share up to the original issue price of $0.226075,$0.76375, $0.775, $1.581975, $3.12186, $6.534, and $11.22726, respectively, in addition to alldeclared but unpaid dividends. If the full amount is not available for distribution, amounts shall be paidout in proportion to the aggregate preferential amounts owed. After the distributions described abovehave been paid in full, the remaining assets of our company shall be distributed ratably among theholders of preferred stock and common stock with the shares of preferred stock being treated as if theyhad been converted to shares of common stock at the applicable conversion rate. The aggregatedistributions made with respect to any share of preferred stock shall not exceed an amount in excessof $0.678225, $2.29125, $2.325, $4.745925, $6.24372, $6.534, and $11.22726 per share for theSeries A, B, C, D, E, F, and G preferred stock, respectively.

Voting Rights

Each share of Series A, B, C, D, E, F, and G preferred stock has the right to one vote for eachshare of common stock into which such preferred stock could be converted and with respect to suchvote, such holder will have full voting rights and powers equal to holders of common stock.

Dividends

Each stockholder of Series A, B, C, D, E, F, and G preferred stock is entitled to receive dividendsat the rate of $0.018075, $0.0611, $0.062, $0.12655, $0.2498, $0.5227, and $0.89818, respectively,per share per annum when and if declared by the Board of Directors, prior to payment of dividends oncommon stock. Dividends are noncumulative, and no dividends have been declared to date.

Redemption

The Series A, B, C, D, E, F, and G preferred stock are not redeemable.

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Warrants

On March 5, 2008, in conjunction with equipment financing, we issued a warrant in favor ofComerica Bank N.A. for 19,640 shares of Series B preferred stock at a price of $0.76375 per share.The warrant expires on the later to occur of March 5, 2018 or three years after the date of an IPO ofour common stock.

On April 25, 2013, we issued a warrant in favor of Croton Partners LLC for 64,424 shares ofcommon stock at a price of $0.68 per share in connection with the hiring of one of our executives. Thewarrant was exercised as of December 31, 2015.

Common Stock

Each share of common stock has the right to one vote. The holders of common stock are alsoentitled to receive dividends whenever funds are legally available and when declared by the Board ofDirectors, subject to the prior rights of holders of all classes of stock outstanding having priority rightsas to dividends. No dividends have been declared by the Board of Directors from inception throughDecember 31, 2016.

Common Stock Reserved for Future Issuance

We have reserved the following shares of common stock for issuance in connection with:

December 31,

2015 2016

Conversion of Series A preferred stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17,914,408 13,683,099Conversion of Series B preferred stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16,366,080 16,366,080Conversion of Series C preferred stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15,484,092 15,484,092Conversion of Series D preferred stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9,481,804 9,481,804Conversion of Series E preferred stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11,851,905 11,851,905Conversion of Series F preferred stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7,736,448 7,736,448Conversion of Series G preferred stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11,427,533 11,427,533Options issued and outstanding . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19,090,117 21,915,624Options available for future option grants . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,694,999 3,758,287Preferred stock warrants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19,640 19,640

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 115,067,026 111,724,512

2015 Common Stock Repurchase

In 2015, in connection with the Series G convertible preferred stock financing, we offered topurchase from eligible stockholders shares of our common stock at a specified purchase price, in cash,without interest and less any option exercise price and applicable withholding taxes (the 2015 CommonStock Repurchase). To participate in the 2015 Common Stock Repurchase, an employee, executive,or member of our Board of Directors must have been with us for a minimum of a year, be a resident ofArgentina, Australia, Germany, Singapore, the United Kingdom, or the United States, and hold sharesof vested common stock and/or vested options to purchase shares of common stock. If an eligibleemployee participated in the offer, they could elect to sell up to 25% of their total vested holdings. If aneligible executive participated in the offer, they could elect sell up to 20% of their total vested holdings.The agreed upon purchase price was $11.23 per share, which was above the fair value price of $7.14

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per share. The total number of repurchased shares was 2,224,222 for a total purchase price of $25.0million. The price paid up to the fair value of our common stock of $15.9 million was accounted for as areduction to equity. The premium that we paid over the fair value of the shares, totaling $9.1 million,was recorded as other compensation expense.

2016 Common Stock Repurchase

In 2016, we exercised our right of first refusal to repurchase 339,285 shares of our common stockfrom former employees for $3.7 million in cash, which included $0.5 million paid in excess of the fairvalue. The shares have been retired.

2016 Tender Offer

In July 2016, we announced a tender offer (2016 Tender Offer) to our employees, executives,members of the Board of Directors and preferred stockholders whereby eligible participants may selltheir shares of our common stock to third party investors. The agreed-upon sale price was $14.18 pershare, which was higher than the fair value of our common stock of $9.72 per share. To participate inthe 2016 Tender Offer, an employee, executive, or member of the Board of Directors must have beenwith us for a minimum of a year, be a resident of Argentina, Australia, Germany, Hong Kong, theNetherlands, Singapore, the United Kingdom, or the United States, and hold shares of vested commonstock and/or vested options to purchase shares of common stock. Preferred stockholders were alsoeligible to participate subject to the same criteria with the exception of the one-year servicerequirement. If an eligible employee participated in the offer, they could elect to sell up to 25% of theirtotal vested holdings. If an eligible executive other than the Chief Executive Officer (“CEO”) or founder,eligible member of the Board of Directors, or preferred stockholder participated in the offer, they couldelect sell up to 20% of their total vested holdings. If the CEO or eligible founder participated in the offer,they could sell up to 10% of their total vested holdings. Any vested stock options or preferred stocksold as part of the 2016 Tender Offer were first exercised or converted into shares of our commonstock based on their original terms and the common stock was subsequently sold to the investors. Thetotal number of tendered shares was 4,346,203 for a total purchase price of $61.6 million. Thepremium that was paid by the third parties over the fair value of the shares, totaling $9.9 million, wasrecorded as other compensation expense. The excess of the sale price of the converted preferredshares over the fair value of our common stock was $9.4 million and was recorded as a deemeddividend within additional paid-in capital.

Other Compensation Expense

Other compensation expense related to the 2015 Common Stock Repurchase and 2016 TenderOffer was as follows (in thousands):


2014 2015 2016

Cost of subscription and support revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ — $ 63 $ 24Cost of professional services and other revenue . . . . . . . . . . . . . . . . . . . . . . . — 62 108Research and development . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — 1,927 1,154Sales and marketing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — 3,343 5,928General and administrative . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — 3,696 2,734

Total other compensation expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ — $9,091 $9,948

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8. Stock Option Plan

In August 2006, we adopted the 2006 Stock Option Plan (the 2006 Plan), which wassubsequently amended. Pursuant to the 2006 Plan, our Board of Directors may grant incentive stockoptions, nonqualified stock options and restricted stock purchase awards to employees, consultantsand directors. Historically, the exercise price per share of the stock options granted under the Plan hasbeen equal to the fair value per share of our common stock on the date of grant. The stock optionswhich have been granted under the 2006 Plan generally vest over a period of four years and expire 10years from the grant date. The 2006 Plan terminated in 2016 and was superseded by the 2016 EquityIncentive Plan (the 2016 Plan). No further equity awards may be granted under the 2006 Plan.

In May 2016, we adopted the 2016 Plan. Pursuant to the 2016 Plan our Board of Directors maygrant incentive stock options, non-statutory stock options, stock appreciation rights, restricted stockand restricted stock unit awards to employees, consultants and directors. The exercise price of optionsgranted under the 2016 Plan must at least be equal to the fair value of our common stock on the dateof grant, except that with respect to any participant with incentive stock options who owns more than10% of the voting power of all classes of our outstanding stock, the exercise price will be no less than110% of the fair value on the grant date. The term of a stock option may not exceed 10 years exceptthat with respect to any participant with incentive stock options who owns more than 10% of the votingpower of all classes of our outstanding stock, the term must not exceed five years. The stock optionswhich have been granted under the 2016 Plan generally vest over a period of four years from the grantdate.

As of December 31, 2015 and 2016, 5,694,999 and 3,758,287 shares, respectively, wereavailable for issuance under the applicable incentive stock plan.

A summary of our stock option activity under the 2006 Plan and 2016 Plan is as follows:

Options Outstanding

OptionsOutstanding

Weighted-Average

Exercise Price

RemainingContractualTerm (Years)

AggregateIntrinsic Value

(In thousands)Balance—December 31, 2014 . . . . . . . . . . . . . . . . . . . . . . . . 18,340,111 $0.94 8.05 $ 30,436

Prior period adjustment . . . . . . . . . . . . . . . . . . . . . . . . . . (1,462) —Granted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,754,311 4.50Exercised . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (4,209,028) 0.49Forfeited . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (1,793,815) 2.00

Balance—December 31, 2015 . . . . . . . . . . . . . . . . . . . . . . . . 19,090,117 2.20 7.93 $109,369Granted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8,772,082 7.84Exercised . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (4,249,381) 1.02 $ 34,159Forfeited . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (1,653,393) 4.16Cancelled . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (43,801) 3.40

Balance—December 31, 2016 . . . . . . . . . . . . . . . . . . . . . . . . 21,915,624 $4.54 7.85 $158,277

Exercisable—December 31, 2015 . . . . . . . . . . . . . . . . . . . . . 8,867,243 $0.91 6.97 $ 62,288

Vested and expected to vest— December 31, 2015 . . . . . . . 16,630,826 $0.90 7.83 $ 97,414

Exercisable—December 31, 2016 . . . . . . . . . . . . . . . . . . . . . 8,169,003 $1.94 6.28 $ 80,189

Vested and expected to vest— December 31, 2016 . . . . . . . 20,614,932 $4.44 7.80 $150,888

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MULESOFT, INC.


The total intrinsic value of options exercised was $4.4 million, $20.8 million, and $34.2 millionduring the years ended December 31, 2014, 2015, and 2016, respectively.

During the years ended December 31, 2014, 2015, and 2016, we granted to our employees stockoptions to purchase 5,379,125, 6,754,311, and 8,772,082 shares of common stock, respectively, with aweighted-average grant date fair value of $1.00, $1.89, and $3.05 per share, respectively. The fairvalue of each option grant was estimated on the date of grant using the following assumptions:


2014 2015 2016

Fair value of common stock . . . . . . . . . . . . . $2.21 – 2.60 $2.60 – 7.93 $7.06 – 11.76Volatility . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40% – 46.45% 35.97% – 46.18% 34.75% – 35.86%Risk-free interest rate . . . . . . . . . . . . . . . . . . 1.7% – 2.0% 1.4% – 2.0% 1.3% – 2.2%Expected term (in years) . . . . . . . . . . . . . . . 5.0 – 6.1 5.5 – 6.6 5.9 – 6.2Expected dividends . . . . . . . . . . . . . . . . . . . . —% —% —%

Stock-based compensation expense (including expense for nonemployees) recognized was asfollows (in thousands):


2014 2015 2016

Cost of subscription and support revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 26 $ 83 $ 231Cost of professional services and other revenue . . . . . . . . . . . . . . . . . . . . . . . 76 262 567Research and development . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 238 579 1,677Sales and marketing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 569 1,548 2,691General and administrative . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 520 846 1,386

Total stock-based compensation expense . . . . . . . . . . . . . . . . . . . . . . . . $1,429 $3,318 $6,552

As of December 31, 2016, there was $31.4 million of total unrecognized compensation costrelated to nonvested options that is expected to vest. The cost is expected to be recognized over aweighted average period of 2.9 years.

9. Geographic Information

Revenue by country from customers, based on the customer’s shipping address at the time ofsale, was as follows (in thousands):


2014 2015 2016

United States . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $37,117 $ 69,139 $116,193United Kingdom . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,439 13,808 25,439Others . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15,061 27,305 46,115

Total revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $57,617 $110,252 $187,747

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MULESOFT, INC.


Long-lived assets by country were as follows (in thousands):

December 31,

2015 2016

United States . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $2,509 $4,974Argentina . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 318 1,784Others . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 283 1,057

Total long-lived assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $3,110 $7,815

10. Income Taxes

The provision for income taxes for 2014, 2015, and 2016 is related to the profits generated incertain foreign jurisdictions by our consolidated subsidiaries.

The following table presents loss before provision for income taxes as follows (in thousands):


2014 2015 2016

Domestic . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $(48,899) $(67,484) $(41,915)Foreign . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,871 2,907 (6,345)

Total loss before provision for income taxes . . . . . . . . . . . . . . . . $(47,028) $(64,577) $(48,260)

The provision for income taxes consisted of (in thousands):


2014 2015 2016

Current:Federal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ — $ — $ —State . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13 20 14Foreign . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 676 834 1,410

Total current tax expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 689 854 1,424

Deferred:Federal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19 14 14State . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 1 2Foreign . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19 (7) (101)

Total deferred tax expense (benefit) . . . . . . . . . . . . . . . . . . . . . . . . $ 39 $ 8 $ (85)

Total provision for income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $728 $862 $1,339

F-27

MULESOFT, INC.


The differences in the total provision for income taxes that would result from applying the 34%federal statutory income tax rate to loss before provision for income taxes and the reported provisionfor income tax were as follows (in thousands):


2014 2015 2016

Tax provision at U.S. statutory rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (34.00)% (34.00)% (34.00)%State income taxes, net of federal benefit . . . . . . . . . . . . . . . . . . . . . . . . . . 0.02 0.02 0.02Foreign taxes in excess of U.S. statutory rate . . . . . . . . . . . . . . . . . . . . . . . 0.12 (0.30) 7.17Change in valuation allowance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35.15 2.70 24.81Gain from intercompany sale of intellectual property . . . . . . . . . . . . . . . . . . — 15.80 —Uncertain tax positions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — 17.46 0.87Nondeductible compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — — 4.03Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.26 (0.35) (0.13)

Provision for income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.55% 1.33% 2.77%

The tax effects of temporary differences that give rise to significant components of our deferredtax assets consist of (in thousands):

December 31,

2015 2016

Deferred tax assets:Accruals and reserves . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 741 $ 1,825Deferred revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — 1,408Net operating loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40,264 48,759Depreciation and amortization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 143 468Research and development credits and other credits . . . . . . . . . . . . . . . . . . . 2,571 4,367Stock-based compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 415 1,170Others . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12 22

Gross deferred tax assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44,146 58,019Less valuation allowance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (43,963) (57,750)

Total deferred tax assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 183 269Deferred tax liabilities:

Goodwill . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (35) (51)

Gross deferred tax liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (35) (51)

Net deferred tax assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 148 $ 218

On December 23, 2015, we made changes to our operating structure to align our entities with ourevolving operations and business model, including transferring our non-US (excluding Canada)economic rights of our intellectual property from our U.S. parent to our subsidiary, a nonresidentSingapore incorporated foreign corporation. The transfer of the intellectual property occurred betweenour U.S. parent and our wholly owned foreign legal entity within the consolidated group that are basedin different tax jurisdictions. As the impact of the transfer was the result of an intra-entity transaction,the gain from the transfer was eliminated and not recognized in the consolidated financial statementsunder U.S. GAAP. For Federal income tax purposes, we recognized a gain of $30.0 million on thetransfer which reduced our net operating loss carryover in the U.S.

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MULESOFT, INC.


In assessing the realizability of deferred tax assets, we evaluate all available positive and negativeevidence by considering whether it is more likely than not that some portion or all of the deferred taxassets will not be recognized. The ultimate realization of deferred tax assets is dependent upon futuretaxable income, future reversals of existing taxable temporary difference, taxable income in carrybackyears and tax-planning strategies. We believe it is more likely than not that the deferred tax assets in theU.S. will not be realized; accordingly, a valuation allowance has been established against our U.S.deferred tax assets. The net change in the valuation allowance for the years ended December 31, 2015and December 31, 2016 was an increase of $3.5 million and $13.8 million, respectively.

As of December 31, 2015, we had net operating loss (NOL) carryforwards for Federal, Californiaand other state income tax purposes of approximately $142.4 million, $49.9 million and $44.0 million,respectively, which will begin to expire in the year 2026, 2017 and 2025, respectively, if not utilized. Asof December 31, 2016, we had NOL carryforwards for Federal, California and other state income taxpurposes of approximately $181.9 million, $56.9 million, and $59.0 million, respectively. Of the Federal,California, and other state NOL carryforwards, $20.4 million, $4.5 million, and $8.4 million relates towindfall stock option deductions which, when we adopt ASU 2016-09, will increase our net operatingloss carryforward deferred tax assets.

As of December 31, 2016, we had Federal and California research credit carryforward ofapproximately $3.3 million and $2.8 million, respectively. The Federal research credits will begin toexpire in 2030 while the California research credits have no expiration date. In addition, we haveCalifornia enterprise zone credits of approximately $0.7 million, which begin to expire in the year 2023if not utilized.

Generally, utilization of the NOL carryforwards and credits may be subject to a substantial annuallimitation due to the ownership change limitations provided by Section 382, which discusses limitationson NOL carryforwards and certain built-in losses following ownership changes, and Section 383, whichdiscusses, special limitations on certain excess credits, etc., of the Internal Revenue Code (IRC) of1986, as amended and similar state provisions. Accordingly, our ability to utilize net operating losscarryforwards may be limited as the result of such an “ownership change”. A formal Section 382 studywas performed through October 31, 2015 and concluded that we have undergone two “ownershipchanges” on August 8, 2006 and March 23, 2010, which resulted in the loss of $0.3 million Federal and$0.3 million California NOL, respectively, before their expiration due to the limitation, which have notbeen included in the above NOL carryover. A formal Section 382 study was performed throughOctober 31, 2016 and concluded that we did not experience an “ownership change” betweenNovember 1, 2015 through October 31, 2016.

We have not provided U.S. income taxes for the unremitted earnings of foreign subsidiariesbecause such earnings are intended to be indefinitely reinvested in the foreign jurisdictions. As ofDecember 31, 2016, we have unremitted earnings from our foreign subsidiaries of $6.4 million, whichwould reduce our NOL carryforward if repatriated and would not impact the financial statements due toits full valuation allowance position.

We recognize the tax benefit of an uncertain tax position only if it is more likely than not that theposition is sustainable upon examination by the taxing authority, based on the technical merits. We usea two-step approach to recognize and measure uncertain tax positions. During the year endedDecember 31, 2016, we recorded a tax reserve of $1.0 million as a reduction of the net operating lossand research credit carryover.

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MULESOFT, INC.


The following table summarizes the activity related to our unrecognized benefits (in thousands):


2015


2016

Beginning balance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 169 $12,603Increases related to tax positions taken during a prior year . . . . . . . . . . . . . . 328 531Increases related to tax positions taken during the current year . . . . . . . . . . 12,106 513

Ending balance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $12,603 $13,647

At December 31, 2016, the unrecognized tax benefits for uncertain tax positions were offsetagainst the deferred tax assets and would not affect the income tax rate if recognized due to our beingin a valuation allowance position. Our policy is to include interest and penalties related to unrecognizedtax benefits, if any, within the provision for taxes in the consolidated statements of operations. We didnot accrue any interest or penalties for the years ended December 31, 2014, 2015, and 2016, nor dowe have any tax positions for interest or penalties for the years ended December 31, 2014, 2015, and2016. We do not have any tax positions for which it is reasonably possible that the total amount ofgross unrecognized tax benefits will significantly change within 12 months of December 31, 2016.

We file federal, state and foreign income tax returns in jurisdictions with varying statutes oflimitations. Due to our NOL carryforwards, our income tax returns generally remain subject toexamination by federal and most state tax authorities. In most of our significant foreign jurisdictions, the2011 through 2016 tax years remain subject to examination by their respective tax authorities.

11. Net Loss Per Share Attributable to Common Stockholders

The following table sets forth the calculation of basic and diluted net loss per share attributable tocommon stockholders during the periods presented (in thousands, except share and per share data):


2014 2015 2016

Numerator:Net loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ (47,756) $ (65,439) $ (49,599)Deemed dividend to preferred stockholders from the 2016

Tender Offer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — — (9,436)

Net loss attributable to common stockholders . . . . . . . . . . . $ (47,756) $ (65,439) $ (59,035)

Denominator:Weighted-average shares used in computing net loss

attributable to common stockholders, basic anddiluted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15,531,314 18,324,048 21,623,610

Net loss per share attributable to common stockholders,basic and diluted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ (3.07) $ (3.57) $ (2.73)

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MULESOFT, INC.


The following outstanding shares of common stock equivalents were excluded from thecomputation of the diluted net loss per share attributable to common stockholders for the periodspresented because their effect would have been anti-dilutive:


2014 2015 2016

Convertible preferred stock on an as-if converted basis . . . . 78,834,737 90,262,270 86,030,961Stock options to purchase common stock . . . . . . . . . . . . . . . 18,340,111 19,090,117 21,915,624Convertible preferred stock warrants . . . . . . . . . . . . . . . . . . . 19,640 19,640 19,640

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 97,194,488 109,372,027 107,966,225

12. Unaudited Pro Forma Net Loss Per Share

Pro forma net loss per share was computed to give effect to the automatic conversion of all seriesof convertible preferred stock using the if-converted method as though the conversion had occurred asof the beginning of the period or the date of issuance, if later.

The following table sets forth the computation of our unaudited pro forma basic and diluted netloss per share (in thousands, except share and per share data):


2016

Numerator:Net loss used in computing pro forma net loss per share . . . . . . . . . . . . . . . . . . . . . . . . . $ (49,599)

Denominator:Weighted-average shares of common stock used in computing net loss per share

attributable to common stockholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21,623,610Weighted-average pro forma adjustment to reflect assumed conversion of convertible

preferred stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 89,296,160

Weighted-average shares of common stock used in computing pro forma net loss pershare . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 110,919,770

Pro forma net loss per share, basic and diluted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ (0.45)

13. Subsequent Events

In January and February 2017, we entered into new office leases in the U.K., Singapore, Texas,and Virginia with terms ranging from one to three years. The total minimum payments for all the leasesis approximately $600,000.

In February 2017, we granted options to purchase an aggregate of 532,746 shares of commonstock with an exercise price of $12.53 per share and an aggregate of 42,312 restricted stock units tobe settled in shares of common stock.

F-31




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